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How Has HZNP Performed 30 Days Post Earnings

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A month has gone by since the last earnings report for Horizon Therapeutics (HZNP - Free Report) . Shares were flat in that time frame, underperforming the S&P 500.

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

Horizon Q2 Earnings Down Y/Y, Tepezza Drives Sales

Horizon reported second-quarter 2020 adjusted earnings of 40 cents per share, which lagged the year-ago quarterly earnings of 49 cents per share. The Zacks Consensus Estimate stood at 40 cents.

Quarterly sales of $462.8 million were up 44% year over year. The top line also beat the Zacks Consensus Estimate of $365 million.Sales were driven by the strong launch of Tepezza, despite a challenging COVID-19 environment.


Quarter in Detail

The company reports financial results under two separate segments —Orphan and Rheumatology, and Inflammation (previously known as the primary care segment). Notably, first-quarter 2020 onward, the Orphan and Rheumatology segment was renamed the Orphan segment.

Sales inthe Orphan segment were $379.3 million, up 87% from the prior-year figure, driven by continued growth of drugs like Tepezza and Ravicti.

Krystexxa sales declined 6% year over year to $75.2 million,reflecting the impact of COVID-19. Tepezza generated net sales worth $165.9 million in the second quarter which exceeded the company’s expectations up from  sales $23.5 million in the sequentially prior quarter. In January 2020, the FDA approved Tepezza for the treatment of thyroid eye disease (TED), well ahead of the set action date of Mar 8, 2020.

Ravicti sales were $65.6 milllion in the quarter, up 30% year over year.

Second-quarter 2020 net sales inthe Inflammation segment were $83.5 million, down 29% year over year, reflecting the impacts of COVID-19.

Adjusted R&D expenses were $28.2 million, up from $21.9 million in the year-ago quarter. Adjusted SG&A expenses were $191.4 million, up from $145.4 million in the year-ago quarter.

2020 Guidance

Per the company, owing to the strong uptake of Tepezza and its substantially higher revenues that more than offset the expected adversity from the COVID-19 pandemic, Horizon Therapeutics significantly raised its full-year sales expectations fromTepezza and correspondingly the net sales guidance.

The company now expects 2020 net sales of $1.85-$1.90 billion, an increase from the previous guidance range of $1.40-$1.45 billion. The company now expects Tepezza’s2020 net sales to bemorethan $650 million compared with the previous guidance of greater than $200 million. 

Other Pipeline Updates

In April, Horizon Therapeutics acquired the privately-held, biopharma company, Curzion Pharmaceuticals, Inc., and its development-stage oral selective lysophosphatidic acid 1 receptor (LPAR1) antagonist, CZN001 (renamed HZN-825), for the treatment of diffuse cutaneous systemic sclerosis (dcSSc).

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 62.74% due to these changes.

VGM Scores

Currently, Horizon Therapeutics has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Horizon Therapeutics has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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