It has been about a month since the last earnings report for Intersect ENT (XENT - Free Report) . Shares have lost about 1.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Intersect ENT 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.
Intersect ENT Q2 Loss Widens, Revenues Beat Estimates
Intersect ENT reported second-quarter 2020 adjusted loss per share of 65 cents, wider than the Zacks Consensus Estimate of a loss of 50 cents as well as the year-ago reported loss of 36 cents. The quarter’s adjustments exclude the impact of losses on embedded derivatives and certain restructuring costs.
Revenues in Detail
Reported revenues in the second quarter plunged 63.3% year over year to $9.8 million but exceeded the Zacks Consensus Estimate by 24.8%. The year-over-year downside resulted from suspension of elective surgical procedures by hospitals and reduced ENT office visits due to the coronavirus pandemic.
Revenues from the PROPEL product line were $9.5 million in the quarter.
Cost of sales was $7.4 million in the reported quarter, up 45.8% year over year. Gross profit declined 88.7% to $2.4 million. Gross margin was 24.8%, reflecting a significant contraction of 5630 basis points (bps) year over year.
Selling, general and administrative expenses were down 29.4% to $19.5 million in the quarter under review. Research and development expenses were $4 million, down 33.5% year over year. Adjusted operating expenses were $23.5 million in the second quarter, down 30.1% year over year.
The company reported adjusted operating loss of $21.1 million, wider than the year-ago adjusted operating loss of $12 million.
Intersect ENT exited the second quarter of 2020 with cash, cash equivalents and short-term investments of $135.8 million compared with $87.7 million at the end of the first quarter.
Intersect ENT withdrew its 2020 guidance on Apr 23 due to uncertainties associated with the pandemic. This time too, due to the rapidly evolving environment and continued uncertainties, the company refrained from providing any new guidance for the ongoing year.
However, based on second-quarter elective procedure volumes and referral trends improvements and a strong third quarter start, the company expects a sequential increase in revenues in each of the quarters of second-half 2020. Also, it expects revenues to grow in 2021 relative to 2019. Intersect ENT also expects gross margin levels to return to the mid-70% range by the end of 2020.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -12.22% due to these changes.
At this time, Intersect ENT has a poor Growth Score of F, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Intersect ENT has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.