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Jazz (JAZZ) Up 4% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Jazz Pharmaceuticals (JAZZ - Free Report) . Shares have added about 4% in that time frame, outperforming the S&P 500.

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

Jazz Pharmaceuticals Q2 Earnings and Sales Beat Estimates

Jazz Pharmaceuticals reported adjusted earnings of $4.30 per share in the second quarter of 2022, beating the Zacks Consensus Estimate of $4.20. Earnings were up 10.3% year over year.

Total revenues in the reported quarter rose 24.1% year over year to $932.9 million. Total revenues beat the Zacks Consensus Estimate of $908.2 million. The year-over-year upside was driven by sales of new drugs and drugs added from the acquisition of GW Pharmaceuticals.

Net product sales increased 24.0% from the year-ago quarter’s levels to $928.3 million. Royalties and contract revenues were up 31.9% to $4.6 million in the quarter.

Neuroscience Products

Sales of Jazz’s neuroscience products increased 19.8% to $696.8 million.

Net product sales for the combined oxybate business (Xyrem + Xywav) increased 10.1% to $504.4 million in the quarter. During the quarter, Jazz achieved a significant milestone as more active oxybate patients were taking Xywav over Xyrem.

Sales of Xyrem declined 19.4% year over year to $269.4 million due to patients switching to Xywav. Jazz expects an authorized generic version of Xyrem to be launched by Hikima Pharmaceuticals in late 2022 or January 2023, which should further hurt sales.

Xywav, a low-sodium formulation of Xyrem, recorded sales of $235.0 million in the quarter, up 89.3% year over year and 26.3% sequentially. This rise was attributable to the encouraging uptake of the drug following FDA approval for label expansion in idiopathic hypersomnia (IH) indication in August 2021.

For the second quarter, Jazz recorded $13.0 million as Sunosi sales which rose 6.9% year over year.

Sales of epilepsy drug Epidiolex/Epidyolex rose 12% (on a proforma basis) to $175.3 million. The drug was added to Jazz’s pipeline with the GW Pharmaceuticals’ acquisition in 2021. Jazz is making significant progress related to the launch of Epidyolex in Europe and other ex-U.S. markets.

Another drug added with the GW Pharma acquisition was Sativex, a cannabis-based mouth spray for multiple sclerosis-related spasticities, approved in Europe but not in the United States. The drug recorded sales of $4.1 million in the quarter, up 111.2% year over year.

Oncology Products

Oncology product sales increased 40.3% to $229.8 million.

New drug Rylaze recorded sales of $73.0 million in the quarter, up 34.6% sequentially. Jazz stated that demand remained strong during the second quarter. Currently, Rylaze is only approved in the United States for treating acute lymphoblastic leukemia (ALL) patients. A regulatory application seeking approval for this ALL drug was filed in Europe in May 2022.

Zepzelca, approved for small cell lung cancer, recorded sales worth $68.3 million in the quarter, up 22.1% year over year.

Acute myeloid leukemia drug, Vyxeos generated sales of $33.9 million, up 7.7% from the year-ago period.

Defitelio sales were up 13.7% year over year at $54.7 million in the quarter.

Cost Discussion

Adjusted selling, general and administrative (SG&A) expenses rose 4.5% to $281.5 million to support higher headcount costs. Adjusted research and development (R&D) expenses rose 4.4% to $123.7 million mainly to support the company’s ongoing clinical activities.

2022 Guidance

The company affirmed its guidance for revenues and adjusted earnings in 2022. The company expects adjusted earnings to be in the range of $16.70-$17.70 per share.

Total revenues are expected to be in the range of $3.5-$3.7 billion.

Neuroscience sales are expected in the range of $2.6 billion-$2.8 billion, while sales for the Oncology franchise are expected in the range of $840 million-$920 million.

Adjusted SG&A expenses are anticipated to be between $1.08 billion and $1.13 billion, while Adjusted R&D expenses are expected to be in the band of $560 million to $600 million

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

The consensus estimate has shifted 6.82% due to these changes.

VGM Scores

Currently, Jazz has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. 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, Jazz has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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