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Why Is Ligand Pharmaceuticals (LGND) Up 5.1% Since the Last Earnings Report?

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A month has gone by since the last earnings report for Ligand Pharmaceuticals Incorporated (LGND - Free Report) . Shares have added about 5.1% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted 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.

Ligand First Quarter Earnings Miss Estimates

Ligand reported first-quarter 2017 earnings of $0.31 per share (including the impact of stock-based compensation expenses), down 32.5% from the year-ago figure.

Excluding share based compensation earnings came in at $0.39 per share in the reported quarter. The bottom line missed the Zacks Consensus Estimate of $0.55 per share.

Including one-time and special items, earnings in the reported quarter came in at $0.22 per share compared to $0.30 a year ago.

Total revenue in the quarter dipped 1% year over year to $29.3 million and also fell short of the Zacks Consensus Estimate of $34 million.

Quarter Highlights

Royalty revenues were $24.2 million in the reported quarter, up approximately 68.1% year over year. Higher royalties on sales of PromactaKyprolis as well Evomela drove the upside.

Material sales plunged to $1.1 million from the year-ago figure of $5.3 million due to the unfavorable timing of Captisol purchases for clinical and commercial use.

License and milestone revenues were $3.9 million compared with $9.9 million in the year-ago period. The decrease was due to a $6 million milestones payment the company received in the first quarter of 2016 as a result of the Evomela approval, which was absent in the first quarter of 2017.

Research & development expenses increased to $8.7 million from $4 million a year ago, primarily due to the completion of enrollment in its ongoing phase II study novel, small-molecule GRA program (LGD-6972) for the treatment of type II diabetes mellitus.

General & administrative expenses increased 2.8% year over year to $7.3 million.

2017 Guidance

Ligand continues to expect 2017 earnings of approximately $2.70 per share on revenues of $130 million. The core revenues are expected to comprise of royalties of approximately $87 million, material sales of approximately $23 million and contract payments of at least $20 million.

The company mentioned that this amount is expected to increase if additional contract revenues are received in 2017.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.

VGM Scores

At this time, Ligand Pharmaceuticals' stock has a nice Growth Score of 'B', though it is lagging on the momentum front with a 'D'. The stock was allocated a grade of 'F' on the value side, putting it in the bottom 20% quintile 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 investors based on our style scores.

Outlook

The stock has a Zacks Rank #5 (Strong Sell). We expect below average returns from the stock in the next few months.


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