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Intersect ENT (XENT) Up 17.6% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Intersect ENT (XENT - Free Report) . Shares have added about 17.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Intersect ENT due for a pullback? 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 Q3 Earnings and Revenues Beat Estimates

Intersect ENT reported third-quarter 2020 adjusted loss per share of 34 cents, narrower than the Zacks Consensus Estimate of a loss of 44 cents as well as the year-ago adjusted loss of 41 cents. The quarter’s adjustments exclude the impact of losses on transaction costs and certain restructuring costs.

Revenues in Detail

Reported revenues in the third quarter declined 5.8% year over year to $22.7 million but exceeded the Zacks Consensus Estimate by 0.5%. The year-over-year downside resulted from suspension of elective surgical procedures by hospitals and limited ENT office visits due to the coronavirus pandemic.

Revenues from the PROPEL product line were $21.1 million in the quarter.

Margins

Cost of sales was $7.8 million in the reported quarter, up 60.9% year over year. Gross profit declined 22.4% to $14.9 million. Gross margin was 65.5%, reflecting a significant contraction of 1426 basis points (bps) year over year.

Selling, general and administrative expenses were down 17.9% to $21.7 million in the quarter under review. Research and development expenses were $4.6 million, down 25.9% year over year. Adjusted operating expenses were $26.3 million in the third quarter, down 19.4% year over year.

The company reported adjusted operating loss of $11.4 million, narrower than the year-ago adjusted operating loss of $13.4 million.

Cash Position

Intersect ENT exited the third quarter of 2020 with cash, cash equivalents and short-term investments of $130.7 million compared with $135.8 million at the end of the second quarter.

Outlook

Intersect ENT withdrew its 2020 guidance on Apr 23 due to uncertainties associated with the pandemic.

However, based on third-quarter elective procedure volumes and referral trends improvements, the company expects fourth-quarter revenues to be 85% to 90% of the year-ago quarter’s revenues. Also, it expects revenues to grow in 2021 relative to 2019. Intersect ENT also expects gross margin levels to return to the low-70% range by the end of 2020.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month. The consensus estimate has shifted -5.26% due to these changes.

VGM Scores

At this time, Intersect ENT has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Intersect ENT has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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