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What's in the Cards for Arena (ARNA) This Earnings Season?
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Arena Pharmaceuticals, Inc. is expected to report second-quarter 2018 earnings early next week.
Shares of the company have rallied 17.7% so far this year against the industry’s 1.5% decrease.
Arena’s earnings performance has been a mixed bag over the trailing four quarters. While the company surpassed expectations in two of the last four quarters, it missed the same on two other occasions with an average beat of 5.37%.
In the last reported quarter, the company missed the Zacks Consensus Estimate, delivering a negative earnings surprise of 11.43%.
Let’s see how things are shaping up prior to this announcement.
Factors at Play
Arena has no marketed drug in its portfolio. However, it records collaboration and royalty revenues from Japanese pharma company Eisai based upon Eisai’s sales of obesity drug Belviq to its distributors.
In such a scenario, investors will remain focused on the development of its pipeline candidates.
Arena is developing ralinepag and etrasimod and has successfully completed phase II studies. The company is developing ralinepag for the treatment of pulmonary arterial hypertension and expects to initiate a phase III study in the second half. Etrasimod is being developed for the treatment of ulcerative colitis and a phase III study is expected soon. The candidate is also being evaluated in early to mid-stage studies in patients with Crohn’s disease and primary biliary cholangitis.
Apart from these two candidates, another candidate – olorinab (APD371) – is being evaluated in a phase II study for the treatment of visceral pain associated with Crohn's disease. Data from the study is expected in the third quarter.
Meanwhile, after the sale of manufacturing operations located in Switzerland and issuance of common shares, Arena is expected to have enough cash to carry out its clinical studies. We expect an update on its operating expense expectations on the second-quarter earnings call.
What Our Model Indicates
Our proven model does not conclusively show that Arena is likely to beat estimates this reporting cycle. This is because a stock needs to have both a positive Earnings ESP and a solid 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.
Earnings ESP: Arena has an Earnings ESP of 0.00% because the Most Accurate Estimate and the Zacks Consensus Estimate stand at a loss of 62 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Arena has a Zacks Rank #3, which increases the predictive power of ESP. However, the company needs a positive ESP to be confident about an earnings surprise.
We caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Arena Pharmaceuticals, Inc. Price and EPS Surprise
BioDelivery Sciences has an Earnings ESP of +3.23% and a Zacks Rank #2. The company is scheduled to release second-quarter results on Aug 9.
Horizon Pharma has an Earnings ESP of +2.56% and a Zacks Rank of 3. The company is scheduled to release second-quarter results on Aug 8.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Image: Bigstock
What's in the Cards for Arena (ARNA) This Earnings Season?
Arena Pharmaceuticals, Inc. is expected to report second-quarter 2018 earnings early next week.
Shares of the company have rallied 17.7% so far this year against the industry’s 1.5% decrease.
Arena’s earnings performance has been a mixed bag over the trailing four quarters. While the company surpassed expectations in two of the last four quarters, it missed the same on two other occasions with an average beat of 5.37%.
In the last reported quarter, the company missed the Zacks Consensus Estimate, delivering a negative earnings surprise of 11.43%.
Let’s see how things are shaping up prior to this announcement.
Factors at Play
Arena has no marketed drug in its portfolio. However, it records collaboration and royalty revenues from Japanese pharma company Eisai based upon Eisai’s sales of obesity drug Belviq to its distributors.
In such a scenario, investors will remain focused on the development of its pipeline candidates.
Arena is developing ralinepag and etrasimod and has successfully completed phase II studies. The company is developing ralinepag for the treatment of pulmonary arterial hypertension and expects to initiate a phase III study in the second half. Etrasimod is being developed for the treatment of ulcerative colitis and a phase III study is expected soon. The candidate is also being evaluated in early to mid-stage studies in patients with Crohn’s disease and primary biliary cholangitis.
Apart from these two candidates, another candidate – olorinab (APD371) – is being evaluated in a phase II study for the treatment of visceral pain associated with Crohn's disease. Data from the study is expected in the third quarter.
Meanwhile, after the sale of manufacturing operations located in Switzerland and issuance of common shares, Arena is expected to have enough cash to carry out its clinical studies. We expect an update on its operating expense expectations on the second-quarter earnings call.
What Our Model Indicates
Our proven model does not conclusively show that Arena is likely to beat estimates this reporting cycle. This is because a stock needs to have both a positive Earnings ESP and a solid 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.
Earnings ESP: Arena has an Earnings ESP of 0.00% because the Most Accurate Estimate and the Zacks Consensus Estimate stand at a loss of 62 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Arena has a Zacks Rank #3, which increases the predictive power of ESP. However, the company needs a positive ESP to be confident about an earnings surprise.
We caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Arena Pharmaceuticals, Inc. Price and EPS Surprise
Arena Pharmaceuticals, Inc. Price and EPS Surprise | Arena Pharmaceuticals, Inc. Quote
Stocks to Consider
Here are a few health care stocks with the right combination of elements to beat estimates this time around are as follows:
Illumina (ILMN - Free Report) has an Earnings ESP of +1.74% and is a Zacks #1 Ranked player. The company is expected to release first-quarter results on Jul 30. You can see the complete list of today’s Zacks #1 Rank stocks here.
BioDelivery Sciences has an Earnings ESP of +3.23% and a Zacks Rank #2. The company is scheduled to release second-quarter results on Aug 9.
Horizon Pharma has an Earnings ESP of +2.56% and a Zacks Rank of 3. The company is scheduled to release second-quarter results on Aug 8.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Click here to see the 5 stocks >>