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Vertex Pharma (VRTX) Q4 Earnings: Stock Likely to Beat?
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We expect biotech company Vertex Pharmaceuticals, Inc. (VRTX - Free Report) to beat expectations when it reports fourth-quarter 2016 and full-year earnings results on Jan 25, after the market closes.
Vertex’s share price lost 14.9% in the past one year, comparing unfavorably with the 12.9% decline recorded by the Zacks-classified Biomed-Genetics industry. The underperformance was due to inconsistent earnings results and slower-than-expected sales of Orkambi.
Vertex’s track record has been mixed so far, with the company delivering positive surprises in two of the last four quarters and missing expectations on the remaining two occasions. The average negative earnings surprise for the last four quarters is 84.38%.
Vertex Pharmaceuticals Inc. Price and EPS Surprise
Let’s see how things are shaping up for this quarter.
Factors at Play
Last week, Vertex announced preliminary financial results for the fourth-quarter 2016 and the full year.
Kalydeco revenues are expected to be $703 million in 2016, within management’s previously announced guidance of $685–$705 million. In the fourth quarter, Kalydecois expected to record sales of $177 million.
Orkambi revenues are expected to be $979 million in 2016, within the company’s guidance range of $950–$990 million. In the fourth quarter, Orkambi revenues are expected to be $276 million, better than $234 million in the third quarter.
Orkambi has been performing below expectations. Slower-than-anticipated launch of the drug in Germany, close-to-peak penetration for the approved indication in the U.S., and lower-than-expected refills in the months of July and August hurt sales in the third quarter.
However, at the third-quarter conference call, management had said that Orkambi revenues will improve sequentially in the fourth quarter due to the pediatric label expansion. In Sep 2016, Orkambi’s label was expanded to include the pediatric population (6–11 years old) – this gives the drug access to about 2,400 CF patients in the U.S.
Management expects the pediatric label expansion to drive sales in the fourth quarter of 2016 as well as in 2017. Moreover, pricing and reimbursement in ex-U.S. countries are expected to drive the top line in 2017.
Total revenue from the CF drugs is expected to be $1.68 billion in 2016, higher than $983 million recorded in 2015.
Operating expenses will shoot up as Vertex develops its pipeline, works on expanding Kalydeco's and Orkambi’s labels, and continues to invest in Orkambi’s launch.
What Our Model Indicates
Our proven model shows that Vertex is likely to 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) for this to happen and Vertex has the right mix.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +400.00%. This is a meaningful indicator of a likely positive earnings surprise. Please check our Earnings ESP Filter that enables you find stocks that are expected to come out with earnings surprises.
Zacks Rank: Vertex has a Zacks Rank #3.
The combination of Vertex’s favorable Zacks Rank and positive ESP makes us confident of an earnings beat in its upcoming release. Conversely, the Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Other Stocks to Consider
Other stocks in the large cap pharmaceuticals sector that have both a positive ESP and a favorable Zacks Rank are:
Eli Lilly and Company (LLY - Free Report) has an Earnings ESP of +3.06% and a Zacks Rank #3. The company is scheduled to release results on Jan 31.
Allergan plc has an Earnings ESP of +0.80% and a Zacks Rank #3. The company is scheduled to release results on Feb 8.
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Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>
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Vertex Pharma (VRTX) Q4 Earnings: Stock Likely to Beat?
We expect biotech company Vertex Pharmaceuticals, Inc. (VRTX - Free Report) to beat expectations when it reports fourth-quarter 2016 and full-year earnings results on Jan 25, after the market closes.
Vertex’s share price lost 14.9% in the past one year, comparing unfavorably with the 12.9% decline recorded by the Zacks-classified Biomed-Genetics industry. The underperformance was due to inconsistent earnings results and slower-than-expected sales of Orkambi.
Vertex’s track record has been mixed so far, with the company delivering positive surprises in two of the last four quarters and missing expectations on the remaining two occasions. The average negative earnings surprise for the last four quarters is 84.38%.
Vertex Pharmaceuticals Inc. Price and EPS Surprise
Vertex Pharmaceuticals Inc. Price and EPS Surprise | Vertex Pharmaceuticals Inc. Quote
Let’s see how things are shaping up for this quarter.
Factors at Play
Last week, Vertex announced preliminary financial results for the fourth-quarter 2016 and the full year.
Kalydeco revenues are expected to be $703 million in 2016, within management’s previously announced guidance of $685–$705 million. In the fourth quarter, Kalydecois expected to record sales of $177 million.
Orkambi revenues are expected to be $979 million in 2016, within the company’s guidance range of $950–$990 million. In the fourth quarter, Orkambi revenues are expected to be $276 million, better than $234 million in the third quarter.
Orkambi has been performing below expectations. Slower-than-anticipated launch of the drug in Germany, close-to-peak penetration for the approved indication in the U.S., and lower-than-expected refills in the months of July and August hurt sales in the third quarter.
However, at the third-quarter conference call, management had said that Orkambi revenues will improve sequentially in the fourth quarter due to the pediatric label expansion. In Sep 2016, Orkambi’s label was expanded to include the pediatric population (6–11 years old) – this gives the drug access to about 2,400 CF patients in the U.S.
Management expects the pediatric label expansion to drive sales in the fourth quarter of 2016 as well as in 2017. Moreover, pricing and reimbursement in ex-U.S. countries are expected to drive the top line in 2017.
Total revenue from the CF drugs is expected to be $1.68 billion in 2016, higher than $983 million recorded in 2015.
Operating expenses will shoot up as Vertex develops its pipeline, works on expanding Kalydeco's and Orkambi’s labels, and continues to invest in Orkambi’s launch.
What Our Model Indicates
Our proven model shows that Vertex is likely to 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) for this to happen and Vertex has the right mix.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +400.00%. This is a meaningful indicator of a likely positive earnings surprise. Please check our Earnings ESP Filter that enables you find stocks that are expected to come out with earnings surprises.
Zacks Rank: Vertex has a Zacks Rank #3.
The combination of Vertex’s favorable Zacks Rank and positive ESP makes us confident of an earnings beat in its upcoming release. Conversely, the Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Other Stocks to Consider
Other stocks in the large cap pharmaceuticals sector that have both a positive ESP and a favorable Zacks Rank are:
AbbVie Inc. (ABBV - Free Report) is expected to release results on Jan 27. The company has an Earnings ESP of +0.83% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Eli Lilly and Company (LLY - Free Report) has an Earnings ESP of +3.06% and a Zacks Rank #3. The company is scheduled to release results on Jan 31.
Allergan plc has an Earnings ESP of +0.80% and a Zacks Rank #3. The company is scheduled to release results on Feb 8.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>