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What's in Store for Emergent (EBS) This Earnings Season?

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Emergent BioSolutions Inc. (EBS - Free Report) is scheduled to report third-quarter 2020 results on Nov 5, after the market closes.

The company’s surprise history has been mixed so far with its earnings beating estimates thrice in the trailing four quarters and missing the same on one occasion. The average surprise is 127.41%. In the last reported quarter, Emergent delivered an earnings surprise of 273.58%.

Shares of Emergent have rallied 66.8% so far this year agaisnt the industry’s decrease of 7.8%.

Let’s see, how things are shaping up for the quarter to be reported.

Factors at Play

Emergent’s revenues in the last reported quarter increased owing to higher product sales, and contract development and manufacturing services revenues, a trend that most likely continued in the to-be-reported quarter as well.

Total product sales surged in the last reported quarter on improved sales of anthrax vaccines and ACAM2000, a trend that most likely continued in the third quarter as well. However, sales of Narcan (naloxone HCl) nasal spray were not very impressive during the second quarter of 2020. In August, the FDA approved the extension of Narcan nasal spray’s shelf life from 24 months to 36 months. It remains to be seen whether this latest development can be a catalyst for Narcan and drive its sales in the soon to-be reported quarter’s upcoming release.

Notably, to address the global COVID-19 pandemic, Emergent inked several contract development and manufacturing (CDMO) deals to provide manufacturing services to various companies for helping them produce their respective experimental vaccine candidates against COVID-19.

The company entered into agreements with big companies, such as AstraZeneca (AZN - Free Report) and Johnson & Johnson (JNJ - Free Report) to provide CDMO services for supporting the large-scale drug substance manufacturing of their respective COVID-19 vaccine candidates, which are currently in late-stage development.

Emergent also has similar contracts with small biotechs, namely Novavax and Vaxart to help them manufacture their respective vaccine candidates to fight COVID-19. The above-mentioned pacts are likely to have driven Emergent’s CDMO deals revenues in the third quarter as well.

Investors will be keen to get an update on the same during the upcoming earnings call.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Emergent this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise. But that is not the case here as discussed below.

Earnings ESP: Emergent has an Earnings ESP of -4.39% as the Most Accurate Estimate currently stands at $1.96 while the Zacks Consensus Estimate is pegged at $2.05 per share. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Zacks Rank: Emergent currently carries a Zacks Rank of 1.

Stock to Consider

Here are some drug/biotech stocks worth considering from the same space as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.

Alnylam Pharmaceuticals (ALNY - Free Report) has an Earnings ESP of +4.23% and a Zacks Rank #3, currently. The company is scheduled to report earnings on Nov 5. You can see the complete list of today’s Zacks #1 Rank stocks here.

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