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Why Is Editas (EDIT) Up 33.8% Since Last Earnings Report?

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A month has gone by since the last earnings report for Editas Medicine (EDIT - Free Report) . Shares have added about 33.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Editas 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 catalysts.

Editas Q2 Earnings Beat Estimates, Revenues Fall Y/Y

Editas incurred a loss of 81 cents per share in the second quarter of 2021, which was narrower than the Zacks Consensus Estimate of a loss of 85 cents per share. The company reported a loss of 43 cents in the year-ago quarter loss.

Collaboration, and other research and development revenues comprising the company’s top line came in at $0.4 million in the reported quarter, compared with $10.7 million reported in the year-ago quarter. The top line substantially missed the Zacks Consensus Estimate of $7 million.

The significant year-over-year decrease in revenues was due to revenues recognized pursuant to an out-license agreement entered in second-quarter 2020 as well as revenues recognized under the strategic alliance with AbbVie. No such revenues were recorded in second-quarter 2021.

Quarter in Detail

In the second quarter of 2021, research and development expenses were $33.8 million, up 20.7% from the year-ago figure due to increased expenses related to clinical pipeline development.

General and administrative expenses increased 56% to $22 million owing to higher stock-based compensation expenses.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 7.13% due to these changes.

VGM Scores

At this time, Editas 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.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Editas has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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