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We expect Cubist Pharmaceuticals Inc. (CBST - Analyst Report) to beat expectations when it releases its fourth-quarter 2012 results on Jan 23, 2013.

Why a Likely Positive Surprise?

Our proven model shows that Cubist Pharma is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP (Expected Surprise Prediction): This is because the Most Accurate estimate stands at 53 cents while the Zacks Consensus is lower at 48 cents. This results in a difference of +10.42%.

Zacks Rank #3 (Hold): Note that stocks with Zacks Rank of #1, #2 and #3 have a significantly higher chance of beating earnings. The sell rated stocks (#4 and #5) should never be considered while going into an earnings announcement. 

The combination of Cubist Pharma’s Zacks Rank # 3 (Hold) and +10.42% ESP causes us to expect a positive earnings beat on Jan 23.

What is Driving the Better Than Expected Earnings?

Cubist Pharma is expected to deliver a positive earnings surprise in the final quarter of 2012 riding on strong sales of its antibiotic once-daily, intravenous injection Cubicin. The Zacks Consensus Estimate for the fourth quarter has moved up by 3 cents to 48 cents per share over the last 30 days due to the obvious positive sentiment.

This biopharmaceutical company has delivered positive earnings surprises in 3 of the last 4 quarters with an average beat of 4.09%. The impressive performance over the last few quarters is attributable to strong revenues, thanks to impressive Cubicin sales.

Other Stocks to Consider

Here are some other pharma companies you may want to consider on the basis of our model, which shows that they have the right combination of elements to post an earnings beat this quarter:

Sanofi (SNY - Analyst Report) has Earnings ESP of +1.35% and carries a Zacks Rank #2 (Buy)

Mylan Inc (MYL - Analyst Report) has Earnings ESP of +4.69% and carries a Zacks Rank #2 (Buy).

Astrazeneca (AZN - Analyst Report) has Earnings ESP of +5.80% and carries a Zacks Rank #3 (Hold)

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