Back to top

Analyst Blog

We expect Biogen Idec, Inc. (BIIB - Analyst Report) to report lower-than-expected earnings when it releases its first-quarter 2013 results before the opening bell on Apr 25. We note that Biogen had missed earnings estimate in the previous quarter too, with a negative earnings surprise of 4.11%.

Factors to Consider this Quarter

Biogen’s fourth quarter 2012 results were hurt by higher expenses.  Moreover, results were adversely affected by a correction in the accounting for taxes on capitalized interest at Biogen’s Denmark facility. The correction increased fourth quarter 2012 tax expense by $29 million and reduced earnings by 12 cents.

We expect operating expenses to remain high in the first quarter as the company continues to invest in its pipeline. Though positive on the US approval of Biogen’s oral multiple sclerosis (MS) treatment, Tecfidera, we note that it is the third oral MS product to reach the market. Consequently, Biogen’s sales force has its task cut out as patients and physicians will have to be convinced to switch over to Tecfidera. Slower-than-expected ramp up of Tecfidera could adversely impact Biogen’s results.

Earnings Whispers

Our proven model does not conclusively show that Biogen is likely to beat the Zacks Consensus Estimate in the first quarter. That is because a stock needs to have both a positive earnings Expected Surprise Prediction (ESP) (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1 (Strong Buy) or at least Zacks Rank #2 (Buy) or Zacks Rank #3 (Hold) for this to happen. Unfortunately this is not the case here as elaborated below.

Negative Zacks ESP: This is because the Most Accurate estimate stands at $1.55 while the Zacks Consensus is higher at $1.57. This results in a difference of -1.27%.
 
Zacks Rank #3 (Hold): Biogen’s Zacks Rank of 3 complicates the predictive power of ESP. That said we need to have a positive ESP to be confident of an earnings surprise call.

Stocks to Consider

Here are some 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:

Eli Lilly and Company (LLY) has an Earnings ESP of +3.85% and holds a Zacks Rank #3 (Hold).

Gilead Sciences Inc. (GILD - Analyst Report) has an Earnings ESP of +2.08% and carries a Zacks Rank #3.

VIVUS Inc. (VVUS - Analyst Report) has an Earnings ESP of +11.77% and carries a Zacks Rank #3.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
CENTURY ALU… CENX 22.53 +4.50%
ERBA DIAGNO… ERB 2.91 +4.30%
PLANAR SYST… PLNR 4.31 +3.86%
MALLINCKROD… MNK 72.17 +3.83%
GTT COMMUNI… GTT 12.06 +3.52%