It has been about a month since the last earnings report for Intersect ENT (
XENT Quick Quote XENT - Free Report) . Shares have lost about 5.1% 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 drivers.
Intersect ENT Q4 Revenues Beat Estimates, Gross Margin Contracts
Intersect ENT reported fourth-quarter 2020 adjusted loss per share of 54 cents, wider than the Zacks Consensus Estimate of a loss of 31 cents as well as the year-ago adjusted loss of 25 cents. The quarter’s adjustments exclude the impact of certain restructuring costs.
Full-year adjusted net loss was $2.05, wider than both the Zacks Consensus Estimate of loss of $1.89 and the year-ago loss of $1.37 per share.
Revenues in Detail
Reported revenues in the fourth quarter declined 11.1% year over year to $28.2 million but exceeded the Zacks Consensus Estimate by 1.1%. While there was year-over-year decline in sales, sequentially it increased approximately 24% on continued recovery in PROPEL, growth in SINUVA and initial sales of the company’s newly acquired Fiagon products.
For 2020, net sales were $80.6 million, down 26% from the year-ago comparable period but ahead of the Zacks Consensus Estimate by 0.6%. The decline was the result of hospitals suspending elective procedures and reduced ENT office visits related to the COVID-19 pandemic.
Cost of sales was $8.7 million in the reported quarter, up 20.6% year over year. Gross profit declined 20.4% to $19.5 million. Gross margin was 69.2%, reflecting a significant contraction of 811 basis points (bps) year over year.
Selling, general and administrative expenses were up 14.4% to $31.2 million in the quarter under review. Research and development expenses were $5.6 million, down 3.3% year over year. Adjusted operating expenses were $36.8 million in the fourth quarter, down 11.3% year over year.
The company reported adjusted operating loss of $17.3 million, wider than the year-ago adjusted operating loss of $8.5 million.
Intersect ENT exited 2020 with cash, cash equivalents and short-term investments of $88 million compared with $90.6 million at the end of 2019.
Despite the continuing uncertainties related to the pandemic, the company expects to grow revenues in 2021 relative to 2019 (the pre-pandemic level). This assumption is based on the current and anticipated elective procedure volumes and referral trends. Anticipating recovery of elective procedures combined with a significant increase in the number of individuals vaccinated against COVID-19, Intersect ENT currently expects 2021 revenues to be in the range of $116-$120 million and gross margins to return to the low-to-mid 70% range. The current Zacks Consensus Estimate for 2020 revenues is pegged at $120 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -25.25% due to these changes.
At this time, Intersect ENT has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth 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. It's no surprise Intersect ENT has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.