A month has gone by since the last earnings report for Denali Therapeutics Inc. (DNLI Quick QuoteDNLI - Free Report) . Shares have lost about 0.1% in that time frame, underperforming the S&P 500.

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

Denali Q2 Earnings Beat on Higher Collaboration Revenues

Denali delivered earnings of $1.30 per share for second-quarter 2023 on higher collaboration revenues. The Zacks Consensus Estimate was pegged at a loss of 86 cents per share. The company had recorded a loss of 48 cents in the year-ago quarter.

Collaboration revenues totaled $294.1 million in the reported quarter, surpassing the Zacks Consensus Estimate of $11 million and surging significantly from $52.5 million recorded in the year-ago quarter.

The massive year-over-year improvement of $241.6 million in collaboration revenues was primarily due to an increase of $293.6 million in revenues under the company’s collaboration agreement with Biogen.

Quarter in Detail

Research and development expenses increased 5.1% to $97.5 million in the quarter under review. This was due to an increase in ETV:IDS and eIF2B programs’ external expenses, reflecting the continued progress of these programs in clinical trials during 2023.

General and administrative expenses increased 23.4% to $26.1 million.

Cash, cash equivalents and marketable securities totaled $1.19 billion as of Jun 30, 2023, compared with $1.29 billion as of Mar 31, 2022.

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 7.63% due to these changes.

VGM Scores

At this time, Denali Therapeutics Inc. has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% 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, Denali Therapeutics Inc. 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

Denali Therapeutics Inc. is part of the Zacks Medical - Biomedical and Genetics industry. Over the past month, Seattle Genetics , a stock from the same industry, has gained 5.8%. The company reported its results for the quarter ended June 2023 more than a month ago.

Seattle Genetics reported revenues of $603.83 million in the last reported quarter, representing a year-over-year change of +21.4%. EPS of -$1.13 for the same period compares with -$0.73 a year ago.

Seattle Genetics is expected to post a loss of $0.72 per share for the current quarter, representing a year-over-year change of +30.1%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Seattle Genetics. Also, the stock has a VGM Score of D.