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Ligand (LGND) Down 13.7% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Ligand Pharmaceuticals (LGND - Free Report) . Shares have lost about 13.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Ligand due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Ligand Beats on Q2 Earnings & Sales

Ligand reported second-quarter 2020 adjusted earnings of $1.00 per share, which beat the Zacks Consensus Estimate of 65 cents. The company had reported adjusted earnings of 68 cents in the year-ago quarter.

Total revenues increased 65.8% year over year to $41.4 million mainly due to higher Captisol revenues. Moreover, the top line surpassed the Zacks Consensus Estimate of $28.22 million.

Quarterly Highlights

Beginning first-quarter 2020, the company reports revenues under four categories — Royalties, Captisol, Service revenues and Contract revenues.

Royalty revenues were $7.2 million in the second quarter compared with $6.6 million in the year-ago quarter. Ligand primarily earns royalties on sales of Amgen's Kyprolis and Acrotech Biopharma’s Evomela, which were developed using its Captisol technology.

Captisol sales were $24.5 million compared with $8.5 million in the year-ago quarter. The significant increase was due to higher sales of Captisol to support availability of Gilead’s Veklury as a treatment for patients with severe COVID-19. The drug received FDA’s Emergency Use Authorization on May 1. Based on Ligand’s current outlook, it plans to increase annual production capacity of Capitsol more than eight-fold next year.

Contract revenues were $5.2 million in the second quarter compared with $5.3 million a year ago. The company recorded Service revenues of $4.6 million, almost flat year over year.

2020 Guidance Raised

Ligand raised its guidance for sales and earnings for 2020. The company expects total revenues and earnings for 2020 to be approximately $165 million and $4.10 per share, respectively compared with the previous guidance of $140 million and $3.65 per share. The Zacks Consensus Estimate for revenues and earnings per share is pegged at $140.7 million and $3.70, respectively.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month. The consensus estimate has shifted -23.29% due to these changes.

VGM Scores

At this time, Ligand has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Ligand has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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