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What's in Store for Vertex (VRTX) this Earnings Season?
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Vertex Pharmaceuticals, Inc. (VRTX - Free Report) is scheduled to report first-quarter 2017 results on Apr 27, after the market closes.
Year to date, Vertex’s shares rose 58.4% while the Zacks classified Medical-Biomed/Genetics industry recorded an increase of 1.8%.
Vertex’s track record has been mixed so far. The company delivered positive surprises in two and missed expectations in two of the last four quarters. The average positive earnings surprise for the last four quarters is 243.75%.
Let’s see how things are shaping up for this quarter.
Factors at Play
Vertex markets two cystic fibrosis (CF) drugs, Kalydeco and Orkambi.
Vertex has faced many challenges with respect to commercialization of Orkambi in ex-U.S. markets due to reimbursement hurdles, discontinuations by patients who had previously initiated treatment with Orkambi and a slower-than-anticipated launch in Germany.
The company expects first-quarter 2017 Orkambi net product revenues to be flat with the fourth-quarter 2016 level.
In 2017, management believes that Orkambi sales growth will be dependent on reimbursement discussions in Europe. At the fourth-quarter 2016 conference call, management also clarified that following the pediatric label expansion approval in Sep 2016, the majority of the eligible younger patients in the U.S. have already initiated treatment. The pediatric label expansion is therefore not expected to contribute much to sales growth of the drug in 2017.
Moreover, Vertex is working on expanding Kalydeco’s label and is studying it in, combination with other CF candidates (VX-661). In Mar 2017, the company announced positive data from two phase III studies evaluating Kalydeco in combination with VX-661 (tezacaftor) in patients suffering from CF, aged 12 years and above, with two copies of the F508del mutation. Based on positive outcome from the studies, the company is planning to submit regulatory applications in the U.S. and EU in the third quarter of 2017.
Vertex is also evaluating a couple of next-generation CFTR correctors (VX-152 and VX-440). The candidates are being evaluated alone as well as part of a triple combination with VX-661 and ivacaftor. Investor focus at the call will be on the triple combination CF regimens, which are crucial for long-term growth of Vertex.
However, operating expenses are likely to shoot up as Vertex expands its pipeline.
What Our Model Indicates
Our proven model does not conclusively show that Vertex is likely to beat on 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. 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 -75.00%. This is because both the Most Accurate Estimate and the current Zacks Consensus Estimate stand at 1 cent and 4 cents, respectively. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Although Vertex’s Zacks Rank #3 increases the predictive power of ESP, its negative ESP makes surprise prediction difficult.
Note that we caution against stocks with Zacks Ranks #4 or 5 (Sell-rated) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some health care stocks that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter.
Ultragenyx Pharmaceutical Inc. (RARE - Free Report) is expected to release results on May 8. The company has an Earnings ESP of +2.94% and a Zacks Rank #3.
Eli Lilly and Company (LLY - Free Report) is scheduled to release results on Apr 25. The company has an Earnings ESP of +1.04% and a Zacks Rank #3.
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What's in Store for Vertex (VRTX) this Earnings Season?
Vertex Pharmaceuticals, Inc. (VRTX - Free Report) is scheduled to report first-quarter 2017 results on Apr 27, after the market closes.
Year to date, Vertex’s shares rose 58.4% while the Zacks classified Medical-Biomed/Genetics industry recorded an increase of 1.8%.
Vertex’s track record has been mixed so far. The company delivered positive surprises in two and missed expectations in two of the last four quarters. The average positive earnings surprise for the last four quarters is 243.75%.
Let’s see how things are shaping up for this quarter.
Factors at Play
Vertex markets two cystic fibrosis (CF) drugs, Kalydeco and Orkambi.
Vertex has faced many challenges with respect to commercialization of Orkambi in ex-U.S. markets due to reimbursement hurdles, discontinuations by patients who had previously initiated treatment with Orkambi and a slower-than-anticipated launch in Germany.
The company expects first-quarter 2017 Orkambi net product revenues to be flat with the fourth-quarter 2016 level.
In 2017, management believes that Orkambi sales growth will be dependent on reimbursement discussions in Europe. At the fourth-quarter 2016 conference call, management also clarified that following the pediatric label expansion approval in Sep 2016, the majority of the eligible younger patients in the U.S. have already initiated treatment. The pediatric label expansion is therefore not expected to contribute much to sales growth of the drug in 2017.
Moreover, Vertex is working on expanding Kalydeco’s label and is studying it in, combination with other CF candidates (VX-661). In Mar 2017, the company announced positive data from two phase III studies evaluating Kalydeco in combination with VX-661 (tezacaftor) in patients suffering from CF, aged 12 years and above, with two copies of the F508del mutation. Based on positive outcome from the studies, the company is planning to submit regulatory applications in the U.S. and EU in the third quarter of 2017.
Vertex is also evaluating a couple of next-generation CFTR correctors (VX-152 and VX-440). The candidates are being evaluated alone as well as part of a triple combination with VX-661 and ivacaftor. Investor focus at the call will be on the triple combination CF regimens, which are crucial for long-term growth of Vertex.
However, operating expenses are likely to shoot up as Vertex expands its pipeline.
What Our Model Indicates
Our proven model does not conclusively show that Vertex is likely to beat on 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. 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 -75.00%. This is because both the Most Accurate Estimate and the current Zacks Consensus Estimate stand at 1 cent and 4 cents, respectively. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Although Vertex’s Zacks Rank #3 increases the predictive power of ESP, its negative ESP makes surprise prediction difficult.
Note that we caution against stocks with Zacks Ranks #4 or 5 (Sell-rated) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some health care stocks that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter.
Proteostasis Therapeutics, Inc. , which is expected to release results on May 12, has an Earnings ESP of +5.17% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Ultragenyx Pharmaceutical Inc. (RARE - Free Report) is expected to release results on May 8. The company has an Earnings ESP of +2.94% and a Zacks Rank #3.
Eli Lilly and Company (LLY - Free Report) is scheduled to release results on Apr 25. The company has an Earnings ESP of +1.04% and a Zacks Rank #3.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>