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Horizon Therapeutics (HZNP) Down 6.6% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Horizon Therapeutics (HZNP - Free Report) . Shares have lost about 6.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Horizon Therapeutics 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.

Horizon's Q3 Earnings Beat Estimates, 2021 Guidance Up

Horizon reported third-quarter 2021 adjusted earnings of $1.75 per share, which beat the Zacks Consensus Estimate of $1.54 and also increased from the year-ago quarter’s adjusted earnings of $1.74.

Quarterly sales of $1.04 billion surged 63% year over year and surpassed the Zacks Consensus Estimate of $980 million. Sales were up in the third quarter following the relaunch of Tepezza for treating TED.

Quarter in Detail

The company reports financial results under two segments, namely Orphan (previously known as the Orphan and Rheumatology segment) and Inflammation (previously known as the primary care segment).

Sales in the Orphan segment were $951 million, up 78% from the prior-year figure, driven by the strong relaunch of Tepezza as well as continued growth of drugs like Krystexxa, Ravicti, Procysbi and Actimmune. The segment represented 92% of the total third-quarter net sales.

Krystexxa sales surged 46% year over year to $158.1 million. Tepezza generated net sales worth $616.4 million in the third quarter, up 115% year over year. Tepezza was relaunched in the United States in April 2021 after sales were negatively impacted by a short-term supply disruption due to U.S. government-mandated COVID-19 vaccine orders, which began in December 2020.

Ravicti sales were $76.2 million in the quarter, up 18% year over year.

Procysbi sales were $49.3 million in the quarter, up 14% year over year.

Net sales in the Inflammation segment were $86 million, down 15% year over year.

Adjusted research and development expenses were $74.3 million, up from $27.7 million in the year-ago quarter. Adjusted SG&A expenses were $301.1 million, up from $194.4 million in the year-ago quarter.

The company had cash, cash equivalents and investments worth $1.07 billion as of Sep 30, 2021, up from $812.3 million as of Jun 30, 2021.

2021 Guidance

Horizon raised the financial guidance it provided earlier this year.

The company expects 2021 net sales between $3.16 and $3.21 billion compared with the previous expectation of $3.025-$3.125 billion. The Zacks Consensus Estimate stands at $3.19 billion.

The company expects Tepezza net sales to be greater than $1.625billion. The same was earlier expected to be more than $1.550 billion. Krystexxa net sales are expected to be above $550 million compared with the previous expectation of $500 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -10.61% due to these changes.

VGM Scores

Currently, Horizon Therapeutics has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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


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