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Jazz Pharma (JAZZ) Q3 Earnings: A Disappointment in Store?
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Jazz Pharmaceuticals plc (JAZZ - Free Report) is scheduled to report third-quarter 2016 results on Nov 8 after the market closes. Last quarter, the company had comfortably surpassed expectations with a positive earnings surprise of 5.26%.
Jazz’s track record is quite encouraging, with the company having beaten earnings estimates thrice in the last four quarters. The average earnings surprise over the last four quarters is +19.51%. Let’s see how things have shaped up for this quarter.
Jazz Pharmaceuticals’ key drugs include Xyrem for cataplexy and excessive daytime sleepiness (EDS), Erwinaze for acute lymphoblastic leukemia, and Defitelio for the treatment of adult and pediatric patients with hepatic veno-occlusive disease (VOD).
Jazz’s key product, Xyrem, should continue performing well. In the second quarter, Xyrem sales had soared 13% year over year. The company’s narcolepsy market expansion efforts include web-based disease awareness programs, utilization of the Swiss Narcolepsy Scale and an overall focus on healthcare provider education.
Second-quarter Defitelio sales were driven mainly by its launch in the U.S. in early April. Thus, the company has raised its guidance for net Defitelio defibrotide sales for 2016 to the range of $105–$125 million from the previous projection of $100–$125 million. We expect the drug to continue the uptrend in the third quarter.
Meanwhile, Jazz has been facing challenges in building sufficient inventory levels for Erwinaze due to constrained manufacturing capacity. The company may continue to experience further supply disruptions in certain markets, including the U.S., in the third quarter and beyond.
On the third-quarter call, focus will be on the company’s performance and pipeline progress. Defitelio’s sales ramp-up in the U.S., patent litigations related to Xyrem and the company’s business development plans will be key areas of focus.
We remind investors that during the second-quarter conference call, the company had lowered its 2016 revenue guidance to the range of $1.485–$1.53 billion from its earlier expectation of $1.49 billion to $1.55 billion.
Earnings Whispers
Our proven model does not conclusively show that Jazz will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to be able to beat estimates. Unfortunately, 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 +0.64%. This is because the Most Accurate estimate is pegged at $1.58, while the Zacks Consensus Estimate stands at $1.57. Please check our Earnings ESP Filter that enables you find stocks that are expected to come out with earnings surprises.
Zacks Rank: Jazz currently carries a Zacks Rank #4. As it is, we caution against Sell-rated stocks (#4 or #5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are a few health care stocks that you may want to consider instead, as our model shows that they have the right combination of elements to post an earnings beat this quarter.
Alcobra Ltd. has an Earnings ESP of +7.41% and a Zacks Rank #2. It is expected to report third-quarter results on Nov 10.
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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Jazz Pharma (JAZZ) Q3 Earnings: A Disappointment in Store?
Jazz Pharmaceuticals plc (JAZZ - Free Report) is scheduled to report third-quarter 2016 results on Nov 8 after the market closes. Last quarter, the company had comfortably surpassed expectations with a positive earnings surprise of 5.26%.
Jazz’s track record is quite encouraging, with the company having beaten earnings estimates thrice in the last four quarters. The average earnings surprise over the last four quarters is +19.51%. Let’s see how things have shaped up for this quarter.
JAZZ PHARMACEUT Price and EPS Surprise
JAZZ PHARMACEUT Price and EPS Surprise | JAZZ PHARMACEUT Quote
Factors at Play
Jazz Pharmaceuticals’ key drugs include Xyrem for cataplexy and excessive daytime sleepiness (EDS), Erwinaze for acute lymphoblastic leukemia, and Defitelio for the treatment of adult and pediatric patients with hepatic veno-occlusive disease (VOD).
Jazz’s key product, Xyrem, should continue performing well. In the second quarter, Xyrem sales had soared 13% year over year. The company’s narcolepsy market expansion efforts include web-based disease awareness programs, utilization of the Swiss Narcolepsy Scale and an overall focus on healthcare provider education.
Second-quarter Defitelio sales were driven mainly by its launch in the U.S. in early April. Thus, the company has raised its guidance for net Defitelio defibrotide sales for 2016 to the range of $105–$125 million from the previous projection of $100–$125 million. We expect the drug to continue the uptrend in the third quarter.
Meanwhile, Jazz has been facing challenges in building sufficient inventory levels for Erwinaze due to constrained manufacturing capacity. The company may continue to experience further supply disruptions in certain markets, including the U.S., in the third quarter and beyond.
On the third-quarter call, focus will be on the company’s performance and pipeline progress. Defitelio’s sales ramp-up in the U.S., patent litigations related to Xyrem and the company’s business development plans will be key areas of focus.
We remind investors that during the second-quarter conference call, the company had lowered its 2016 revenue guidance to the range of $1.485–$1.53 billion from its earlier expectation of $1.49 billion to $1.55 billion.
Earnings Whispers
Our proven model does not conclusively show that Jazz will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to be able to beat estimates. Unfortunately, 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 +0.64%. This is because the Most Accurate estimate is pegged at $1.58, while the Zacks Consensus Estimate stands at $1.57. Please check our Earnings ESP Filter that enables you find stocks that are expected to come out with earnings surprises.
Zacks Rank: Jazz currently carries a Zacks Rank #4. As it is, we caution against Sell-rated stocks (#4 or #5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are a few health care stocks that you may want to consider instead, as our model shows that they have the right combination of elements to post an earnings beat this quarter.
Alcobra Ltd. has an Earnings ESP of +7.41% and a Zacks Rank #2. It is expected to report third-quarter results on Nov 10.
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.
Infinity Pharmaceuticals, Inc. is scheduled to report results on Nov 7. The company has an Earnings ESP of +5.81% and a Zacks Rank #1.You can see the complete list of today’s Zacks #1 Rank stocks here.
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>>