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In the last reported quarter, the company’s earnings of $2.55 missed the Zacks Consensus Estimate by 0.78%. Earnings surpassed estimates in three of the trailing four quarters and missed in one, the average beat being 105.64%.
Let’s take a look at how things have shaped up prior to this announcement.
Factors at Play
The core NGS arm has been witnessing strong year-over-year gains over the past few quarters. In the second quarter of 2021, the NGS business registered an incredible 296% growth year over year, exceeding the company’s expectations. In the to-be-reported quarter, the acquisition of CSI Laboratories is likely to have contributed to growth in this arm by expanding the company’s oncology testing and molecular diagnostic solutions offerings. Earlier, Fulgent Genetics noted that CSI Laboratories will add almost 400 new tests to its NGS test menu, including NGS cancer test to a liquid biopsy and MRD, hereditary cancer test, and comprehensive test menus for rare disease and adult genetics, which, per management, is an industry first.
The company is also likely to have gained from its strategic investment in Helio Health. Notably, Helio Health is an emerging liquid biopsy company focused on the early detection of cancer. Fulgent's strategic agreement with Helio Health is expected to enable it to achieve traction in the early detection liquid biopsy industry in both the U.S. and China markets. The company is also expected to gain from the recently concluded acquisition of its joint venture (JV) in China. This JV will allow the company direct access to China's rapidly growing genetic testing market.
Regarding COVID-19 revenues, in the second quarter, the company witnessed a sharper-than-expected fall in testing volume owing to rapid vaccinations and lower demand from drive-thru sites, particularly in California. This volatility around COVID-19 testing demand has led the company to slash its COVID-19 revenue expectations for the year to $690 million, down from its previous guidance of $730 million. However, with the emergence of the more lethal Delta variant and the increase in the number of COVID-19 infections, the testing demand is likely to have picked up during the third quarter. Further, in an increasingly uncertain world, government organizations and schools are requiring more regular testing. The company is also securing significant back-to-school testing wins on the West Coast and in the Southeast in addition to New York City schools. Meanwhile, few states have also mandated testing for healthcare and government employees. These trends indicate yet another significant opportunity for Fulgent, in terms of COVID testing gains in the third quarter.
Q3 Estimates
The Zacks Consensus Estimate for third-quarter 2021 revenues is pegged at $264 million, suggesting a stupendous 159.5% surge over the year-ago reported figure.
The Zacks Consensus Estimate for the company’s third-quarter 2021 earnings per share of $1.30 indicates a 37.5% significant decline from the year-ago adjusted figure.
What Our Model Suggests
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has higher chances of beating estimates. However, this is not the case here, as you can see:
Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #2.
Stocks Worth a Look
Here are a few stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.
Enanta Pharmaceuticals, Inc. (ENTA - Free Report) has an Earnings ESP of +108.2% and a Zacks Rank of 2. The company is expected to release fiscal fourth-quarter 2021 results on Nov 22.
Gemini Therapeutics, Inc. has an Earnings ESP of +17.61% and a Zacks Rank of 2. The company is expected to report third-quarter 2021 results on Nov 11.
Unique Zacks Analysis of Your Chosen Ticker
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Fulgent Genetics (FLGT) to Post Q3 Earnings: What's in Store?
Fulgent Genetics, Inc. (FLGT - Free Report) is set to report third-quarter 2021 results on Nov 9, after market close.
In the last reported quarter, the company’s earnings of $2.55 missed the Zacks Consensus Estimate by 0.78%. Earnings surpassed estimates in three of the trailing four quarters and missed in one, the average beat being 105.64%.
Let’s take a look at how things have shaped up prior to this announcement.
Factors at Play
The core NGS arm has been witnessing strong year-over-year gains over the past few quarters. In the second quarter of 2021, the NGS business registered an incredible 296% growth year over year, exceeding the company’s expectations. In the to-be-reported quarter, the acquisition of CSI Laboratories is likely to have contributed to growth in this arm by expanding the company’s oncology testing and molecular diagnostic solutions offerings. Earlier, Fulgent Genetics noted that CSI Laboratories will add almost 400 new tests to its NGS test menu, including NGS cancer test to a liquid biopsy and MRD, hereditary cancer test, and comprehensive test menus for rare disease and adult genetics, which, per management, is an industry first.
Fullgent Genetics Price and EPS Surprise
Fullgent Genetics price-eps-surprise | Fullgent Genetics Quote
The company is also likely to have gained from its strategic investment in Helio Health. Notably, Helio Health is an emerging liquid biopsy company focused on the early detection of cancer. Fulgent's strategic agreement with Helio Health is expected to enable it to achieve traction in the early detection liquid biopsy industry in both the U.S. and China markets. The company is also expected to gain from the recently concluded acquisition of its joint venture (JV) in China. This JV will allow the company direct access to China's rapidly growing genetic testing market.
Regarding COVID-19 revenues, in the second quarter, the company witnessed a sharper-than-expected fall in testing volume owing to rapid vaccinations and lower demand from drive-thru sites, particularly in California. This volatility around COVID-19 testing demand has led the company to slash its COVID-19 revenue expectations for the year to $690 million, down from its previous guidance of $730 million. However, with the emergence of the more lethal Delta variant and the increase in the number of COVID-19 infections, the testing demand is likely to have picked up during the third quarter. Further, in an increasingly uncertain world, government organizations and schools are requiring more regular testing. The company is also securing significant back-to-school testing wins on the West Coast and in the Southeast in addition to New York City schools. Meanwhile, few states have also mandated testing for healthcare and government employees. These trends indicate yet another significant opportunity for Fulgent, in terms of COVID testing gains in the third quarter.
Q3 Estimates
The Zacks Consensus Estimate for third-quarter 2021 revenues is pegged at $264 million, suggesting a stupendous 159.5% surge over the year-ago reported figure.
The Zacks Consensus Estimate for the company’s third-quarter 2021 earnings per share of $1.30 indicates a 37.5% significant decline from the year-ago adjusted figure.
What Our Model Suggests
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has higher chances of beating estimates. However, this is not the case here, as you can see:
Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #2.
Stocks Worth a Look
Here are a few stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.
BellRing Brands, Inc. (BRBR - Free Report) has an Earnings ESP of +14.11% and a Zacks Rank of 2. The company will announce fourth-quarter fiscal 2021 results on Nov 18. You can see the complete list of today’s Zacks #1 Rank stocks here.
Enanta Pharmaceuticals, Inc. (ENTA - Free Report) has an Earnings ESP of +108.2% and a Zacks Rank of 2. The company is expected to release fiscal fourth-quarter 2021 results on Nov 22.
Gemini Therapeutics, Inc. has an Earnings ESP of +17.61% and a Zacks Rank of 2. The company is expected to report third-quarter 2021 results on Nov 11.