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Pacira (PCRX) Down 7.2% Since Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Pacira Pharmaceuticals, Inc. (PCRX - Free Report) . Shares have lost about 7.2% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Pacira Misses on Earnings Estimates, Beats on Sales

Pacira reported fourth-quarter 2016 loss of $0.10 (including the impact of stock-based compensation), narrower than the Zacks Consensus Estimate loss of $0.15 but wider than the year-ago loss of $0.04.

Revenues, on the other hand, surged 5.2% year over year to $72.9 million and marginally missed the Zacks Consensus Estimate of $73 million. Revenues were in line with the preliminary results reported by the company in Jan 2017.

Quarter in Detail

Pacira’s top line comprises product revenues, collaborative licensing and milestone revenues, and royalty revenues. Its lead product, Exparel, generated revenues of $71.4 million, up 6.3% year over year. DepoCyt(e) and other product revenues came in at $0.3 million, down 66%.

Collaborative licensing and milestone revenues were in line at to $0.4 million. Royalty revenues were $0.8 million, up 0.8%.

Research and development (R&D) expenses were up 30% to $17.1 million, while selling, general and administrative (SG&A) expenses increased 7.7% to $34.7 million.

In Mar 2017, the company announced positive topline data from its phase IV 4 study on Exparel in TKA. The study met its co-primary endpoints for postsurgical pain and opioid reduction against an active comparator- bupivacaine.  The Exparel group achieved a statistically significant reduction in under the curve (AUC) of visual analog scale (VAS) scores compared to those who did not receive Exparel. The company plans to report the statistical results for key secondary endpoints from this study shortly.
 

2016 Results

For full year 2016, loss came in at $0.15.

Revenues in 2016 were $276.4 million up 11% year over year missing the Zacks Consenus Estimate of $277 million.

2017 Outlook

For 2017, the company projects Exparel sales in the range of $290 million to $310 million. R&D expenses are expected in the range of $50 million to $60 million (old guidance: $60–$70 million). SG&A expenses are, expected to be $145–$15 million. Stock-based compensation is forecast to be in the range of $30 -$35 million.

Note: The EPS data mentioned in the text of this section differs from the rest of the report due to the difference in calculation or consideration of one-time items.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter. In the past month, the consensus estimate has shifted lower by 462.5% due to these changes.

VGM Scores

At this time, Pacira's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with an 'F'. Charting a somewhat similar path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for growth based on our styles scores.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.


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