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Is a Beat in Store for Horizon Pharma (HZNP) in Q4 Earnings?

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We expect Horizon Pharma plc to beat expectations when it reports fourth-quarter 2017 results on Feb 28, before the opening bell.

Last quarter, the company missed expectations by 18.18%. Let’s see how things are shaping up for this quarter.

Horizon Pharma’s shares have declined 18.6% in the year so far, underperforming the industry’s decline of 2.2%.

Factors Likely to Impact This Quarter

Horizon Pharma expects continued double-digit net sales growth for Ravicti in 2017, with room for additional uptake due to the recent label expansion. The drug is also expected to be launched in Europe in the fourth quarter. However, sales of Procysbi will decline due to the divestiture of European rights. Sales of Actimmune are projected to grow around 5%.

Meanwhile in October, the company launched Procysbi in Canada. The FDA has also approved a label expansion of the drug in December to include children aged one year and above suffering from nephropathic cystinosis.

In October, Horizon Pharma initiated a confirmatory phase III clinical trial, evaluating its development-stage medicine teprotumumab for moderate-to-severe active thyroid eye disease

However, Horizon Pharma’s primary care business is under pressure due to the implementation of a new commercial model, where the company is teaming up with pharmacy benefit managers and payers to help patients obtain access to its medicines. The impact of the new model on its performance remains to be seen.

Concurrent with the third-quarter earnings, the company also raised its outlook for 2017. It expects sales in the range of $1.030-$1.055 billion compared with the earlier estimate of $1.010-$1.045 billion.

During the fourth-quarter earnings call, investors’ focus will be on the performance of business units, along with that of products like Actimmune and Krystexxa and update on teprotumumab development.

Surprise History

Horizon Pharma’s track record has been mixed so far with a four-quarter average positive earnings surprise of 67.69%. The company beat estimates thrice in the four trailing quarters while missing the same only once.

Earnings Whispers

Our proven model shows that Horizon Pharma is likely to beat estimates this quarter as it has the right combination of two key ingredients – a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) – which have a significantly higher chance of beating earnings.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +10.09%. This is because the Most Accurate estimate is pegged at 24 cents per share while the Zacks Consensus Estimate is pegged at 22 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Horizon Pharma currently carries a Zacks Rank #3, which when combined with a positive ESP makes us reasonably confident of an earnings beat.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Horizon Pharma PLC Price and EPS Surprise

 

Horizon Pharma PLC Price and EPS Surprise | Horizon Pharma PLC Quote

Stocks That Warrant a Look

Here are a couple of healthcare 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.

Gemphire Therapeutics is expected to release results on Mar 21. The company has an Earnings ESP of +6.62% and a Zacks Rank #2.You can see the complete list of today’s Zacks #1 Rank stocks here.

Puma Biotechnology (PBYI - Free Report) is scheduled to release results on Mar 1. The company has an Earnings ESP of +2.02% and a Zacks Rank #3.

Atara Biotherapeutics, Inc. (ATRA - Free Report) is expected to release results on Mar 8. The company has an Earnings ESP of +7.42% and a Zacks Rank #3.

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