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Nivalis (NVLS) Q3 Earnings Preview: Can the Stock Surprise?
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Nivalis Therapeutics, Inc. is expected to report third-quarter 2016 results on Nov 7. Last quarter, the company posted a negative surprise of 5.77%. Let’s see how things are shaping up for this announcement.
Nivalis’ performance has been disappointing so far. Over the four trailing quarters, the company’s earnings have missed expectations on three occasions and met the same once, bringing the average negative earnings surprise to 9.59%.
Nivalis, a development-stage pharmaceutical company, is focused on the discovery, development and commercialization of treatments for cystic fibrosis (CF). With no approved product in its portfolio at the moment, Nivalis does not generate any revenue yet. In this scenario, investor focus will be on the company’s progress with regard to its lead candidate, Cavosonstat (N91115).
On Jul 2016, the company announced the completion of enrollment in a phase II study evaluating Cavosonstat for the treatment of patients with CF who have two copies of the F508del mutation, in combination with Vertex Pharmaceuticals Inc.’s (VRTX - Free Report) Orkambi. Top-line data should be out by the end of this year.
During the quarter (May 2016), Nivalis dosed the first patient in another phase II study on Cavosonstat. This proof-of-concept study is being conducted to evaluate the effect of Cavosonstat as add-on therapy to Vertex’s Kalydeco in adults who have one copy of the F508del mutation and a second mutation that results in a gating defect in the CFTR protein. Data from the study are expected in the first half of 2017.
Meanwhile, Nivalis is expected to see a sequential rise in operating expenses due to continued investment in the development of Cavosonstat and other factors.
Earnings Whispers
Our proven model does not conclusively show that Nivalis is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. However, that is not the case here, as you will see below.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 59 cents.
Please check our Earnings ESP Filter that enables you find stocks that are expected to come out with earnings surprises.
Zacks Rank: Though Nivalis’ Zacks Rank #3 increases the predictive power of the ESP, its 0.00% ESP makes surprise prediction difficult.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a couple of health care stocks you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter.
Allergan plc has an Earnings ESP of +0.56% and a Zacks Rank #3. The company is scheduled to report third-quarter results on Nov 2.
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Nivalis (NVLS) Q3 Earnings Preview: Can the Stock Surprise?
Nivalis Therapeutics, Inc. is expected to report third-quarter 2016 results on Nov 7. Last quarter, the company posted a negative surprise of 5.77%. Let’s see how things are shaping up for this announcement.
Nivalis’ performance has been disappointing so far. Over the four trailing quarters, the company’s earnings have missed expectations on three occasions and met the same once, bringing the average negative earnings surprise to 9.59%.
NIVALIS THERAPT Price and EPS Surprise
NIVALIS THERAPT Price and EPS Surprise | NIVALIS THERAPT Quote
Factors at Play
Nivalis, a development-stage pharmaceutical company, is focused on the discovery, development and commercialization of treatments for cystic fibrosis (CF). With no approved product in its portfolio at the moment, Nivalis does not generate any revenue yet. In this scenario, investor focus will be on the company’s progress with regard to its lead candidate, Cavosonstat (N91115).
On Jul 2016, the company announced the completion of enrollment in a phase II study evaluating Cavosonstat for the treatment of patients with CF who have two copies of the F508del mutation, in combination with Vertex Pharmaceuticals Inc.’s (VRTX - Free Report) Orkambi. Top-line data should be out by the end of this year.
During the quarter (May 2016), Nivalis dosed the first patient in another phase II study on Cavosonstat. This proof-of-concept study is being conducted to evaluate the effect of Cavosonstat as add-on therapy to Vertex’s Kalydeco in adults who have one copy of the F508del mutation and a second mutation that results in a gating defect in the CFTR protein. Data from the study are expected in the first half of 2017.
Meanwhile, Nivalis is expected to see a sequential rise in operating expenses due to continued investment in the development of Cavosonstat and other factors.
Earnings Whispers
Our proven model does not conclusively show that Nivalis is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. However, that is not the case here, as you will see below.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 59 cents.
Please check our Earnings ESP Filter that enables you find stocks that are expected to come out with earnings surprises.
Zacks Rank: Though Nivalis’ Zacks Rank #3 increases the predictive power of the ESP, its 0.00% ESP makes surprise prediction difficult.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a couple of health care stocks you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter.
Ariad Pharmaceuticals Inc. is expected to report earnings on Nov 1.The company has an Earnings ESP of +5.26% and a Zacks Rank #2. You can seethe complete list of today’s Zacks #1 Rank stocks here.
Allergan plc has an Earnings ESP of +0.56% and a Zacks Rank #3. The company is scheduled to report third-quarter results on Nov 2.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand.Click to see them now>>