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Madrigal (MDGL) Q1 Earnings: Disappointment in the Cards?

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Madrigal Pharmaceuticals, Inc. (MDGL - Free Report) is expected to report first-quarter 2018 results in the second week of this month. 

Last reported quarter, Madrigal delivered a positive surprise of 1.47%.

Shares of the company have outperformed the industry so far this year. The stock has rallied 23.3% versus the industry’s decline of 3.4%.

 

Let’s see, how things are shaping up at the company this last completed quarter.

Factors to Consider

Madrigal’s portfolio falls short of an approved product. So, the investor focus will completely revolve around the company’s lead pipeline candidate, MGL-3196, on first-quarter conference call.Madrigal’s lead pipeline candidate, MGL-3196, is a liver-directed THR-ß agonist, currently under evaluation in a phase II study for the treatment of non-alcoholic steatohepatitis (NASH). Last December, the company informed about MGL-3196’s success of meeting its primary endpoints in the study, demonstrating liver fat reduction by 30% in comparison to treatment with placebo at 12 weeks. We expect management to provide an update on the same in the company’s first-quarter earnings release.

Additionally, the company is developing MGL-3196 for dyslipidemia, particularly genetic dyslipidemias such as familial hypercholesterolemia (FH) including both homozygous and heterozygous (HeFH) forms of the disease. A phase II study on HeFH is currently underway.

This February, the company produced positive data from the study, underlining MGL-3196’s achievement of primary endpoints in the trial and a statistically marked improvement in the reduction of LDL cholesterol (LDL-C) when compared with placebo.

Favorable outcomes will likely tend to back the initiation of phase III program on MGL-3196 for both the NASH and HeFH indications.

Earnings Whispers

Our proven model does not conclusively show that Madrigal is likely to beat on earnings this to-be-reported quarter. This is because a stock needs to have both a positive Earnings ESP and a bullish Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Zacks ESP: Madrigal has an Earnings ESP of -1.79%. This is because the Most Accurate estimate is pegged at a loss of 76 cents, wider than the Zacks Consensus Estimate of a loss of 75 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Madrigal carries a Zacks Rank #5 (Strong Sell), which lowers the predictive power of ESP. We always caution against the Sell-rated stocks (4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

 

Stocks to Consider

Some health care stocks with the right combination of elements to surpass estimates this time around are as follows:

Emergent Biosolutions Inc. (EBS - Free Report) has an Earnings ESP of +61.80% and a Zacks Rank #3.  The company is scheduled to release first-quarter results on May 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Vanda Pharmaceuticals Inc. (VNDA - Free Report) has an Earnings ESP of +25.00% and a Zacks Rank #2. The company is scheduled to release first-quarter results on May 2.

Adverum Biotechnologies, Inc. (ADVM - Free Report) has an Earnings ESP of +6.90% and a Zacks Rank of 3. The company is expected to release first-quarter results on May 8.

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