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Why Is Jazz (JAZZ) Up 0.1% Since Last Earnings Report?

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A month has gone by since the last earnings report for Jazz Pharmaceuticals (JAZZ - Free Report) . Shares have added about 0.1% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important drivers.

Q3 Earnings and Sales Beat Estimates

Jazz Pharmaceuticals reported adjusted earnings of $5.17 per share in third-quarter 2022, beating the Zacks Consensus Estimate of $4.72. Earnings were up 23.1% year over year.

Total revenues in the reported quarter rose 12% year over year to $940.7 million. Total revenues beat the Zacks Consensus Estimate of $939.9 million. The upside was driven by sales of new drugs and drugs added from the acquisition of GW Pharmaceuticals.

Net product sales increased 12.2% from the year-ago quarter’s levels to $935.8 million. Royalties and contract revenues were up 26.3% to $4.9 million in the quarter.

Neuroscience Products

Sales of Jazz’s neuroscience products increased 10.1% to $711.4 million.

Net product sales for the combined oxybate business (Xyrem + Xywav) increased 11% to $512 million in the quarter. During the quarter, average active oxybate patients rose 10% year over year to approximately 17,600.

Sales of Xyrem declined 16.7% year over year to $256 million due to patients switching to Xywav. Jazz expects an authorized generic version of Xyrem to be launched in late 2022 or January 2023, which should hurt sales.

Xywav, a low-sodium formulation of Xyrem, recorded sales of $255.9 million in the quarter, up 67.2% year over year and 8.9% sequentially. The upside can be attributed to the encouraging uptake of the drug in narcolepsy and idiopathic hypersomnia (IH) indications. As of October 2022-end, Jazz achieved a new significant milestone. There are now more narcolepsy patients taking Xywav than those taking Xyrem.

Sales of the epilepsy drug Epidiolex/Epidyolex rose 22% to $196.2 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.

During the quarter, JAZZ initiated a pivotal late-stage study on Epidiolex to support its label expansion to include epilepsy patients with myoclonic-atonic seizures. Jazz expects that Epidiolex has the potential to be a blockbuster drug in epilepsy indications.

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 $3.2 million in the quarter, down 47.2% year over year.

Oncology Products

Oncology product sales increased 20.9% to $223.4 million.

New drug Rylaze recorded sales of $73.5 million in the quarter, up 256% year over year and 0.8% sequentially. Jazz stated that demand remained strong during the quarter.

Zepzelca, approved for small cell lung cancer, recorded sales worth $70.3 million in the quarter, down 2% year over year. Per management, sales in the previous quarter were favorably impacted due to lower-than-expected actual returns.

Acute myeloid leukemia drug, Vyxeos, generated sales of $30.1 million, down 13.3% from the year-ago period’s levels.

Defitelio sales were down 14.3% year over year at $49.5 million in the quarter.

Cost Discussion

Adjusted selling, general and administrative (SG&A) expenses were down 1.4% to $274.7 million due to lower marketing related expenses incurred by the company during the quarter-under-review.

Adjusted research and development (R&D) expenses fell 2.9% to $120.8 million, mainly due to lower expenses incurred by management to support the company’s ongoing clinical activities compared with the year-ago quarter’s levels.

2022 Guidance Revised

While the company raised the lower range of its previously provided guidance for revenues in 2022, it raised its outlook for adjusted earnings. The company expects adjusted earnings to be in the range of $17.20 - $17.85 per share, up from the previously provided guidance range of $16.70-$17.70.

Total revenues are now expected to be in the range of $3.6-$3.7 billion compared with the previously-provided range of $3.5-$3.7 billion.

Neuroscience sales are expected in the range of $2.7 billion-$2.8 billion (previous guidance was $2.6 billion-$2.8 billion), while sales for the Oncology franchise are expected in the range of $860 million-$920 million (previous guidance was $840 million-$920 million).

Adjusted SG&A expenses are anticipated to be between $1.09 billion and $1.12 billion (previous guidance was $1.08 billion-$1.13 billion), while Adjusted R&D expenses are now expected to be in the band of $490 million to $520 million billion (previous guidance was $560-$600 million).

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -27.96% due to these changes.

VGM Scores

At this time, Jazz has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

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

Performance of an Industry Player

Jazz belongs to the Zacks Medical - Drugs industry. Another stock from the same industry, Catalent (CTLT - Free Report) , has gained 1.5% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.

Catalent reported revenues of $1.02 billion in the last reported quarter, representing a year-over-year change of -0.3%. EPS of $0.34 for the same period compares with $0.71 a year ago.

Catalent is expected to post earnings of $0.72 per share for the current quarter, representing a year-over-year change of -20%. Over the last 30 days, the Zacks Consensus Estimate has changed +2.7%.

Catalent has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.


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