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Why Is Halozyme Therapeutics (HALO) Up 2.8% Since Last Earnings Report?

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A month has gone by since the last earnings report for Halozyme Therapeutics (HALO - Free Report) . Shares have added about 2.8% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Halozyme Therapeutics 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 catalysts.

Halozyme’s Q3 Earnings Top Estimates, Revenues Lag

Halozyme delivered third-quarter 2023 adjusted earnings of 75 cents per share, which beat the Zacks Consensus Estimate of 71 cents. The company had recorded earnings of 74 cents per share in the year-ago period.

Total revenues increased 3.4% year over year to $216 million in the third quarter. This was primarily driven by continued growth in Xyosted and Halozyme’s proprietary Enhanze technology, along with an increase in royalty revenues.

The addition of product sales following the acquisition of Antares Pharma in May 2022 and higher royalty payments from J&J for subcutaneous Darzalex (daratumumab) and Roche’s Phesgo boosted the top line in the third quarter.

Revenues, however, missed the Zacks Consensus Estimate of $219 million in the third quarter of 2023.

Quarterly Highlights

Halozyme’s top line comprises product sales, royalties and revenues under collaborative agreements.

Royalty revenues totaled $114.4 million in the third quarter, up almost 15% from the year-ago quarter’s level. This was mainly due to robust demand for J&J’s subcutaneous Darzalex and Roche’s Phesgo. Royalty revenues accounted for nearly 53% of the company’s total revenues during the reported quarter. Royalty revenues missed our model estimate of $115.7 million.

Product sales came in at $86.6 million, about 41% higher than the year-ago quarter’s figure. HALO supplies API to ENHANZE partners like J&J and Roche, contributing to product revenues. Product sales beat our model estimate of $70.5 million.

Revenues under collaborative agreements were $15 million, down almost 68.7% from the year-ago quarter’s level. Collaboration revenues fell short of our model estimate of $37.1 million.

Adjusted EBITDA was $114.9 million in the third quarter, marking a 4.3% increase from the prior-year quarter.

Adjusted net income decreased 2.7% to $100.5 million in the reported quarter.

Halozyme had cash, cash equivalents and marketable securities of $483.3 million as of Sep 30, 2023, compared with $348.3 million as of Jun 30, 2023.

2023 Guidance Updated

Halozyme maintained its previously issued revenue guidance for full-year 2023.

The company continues to expect total revenues in the range of $825-$845 million for 2023.

Revenues from royalties are anticipated in the range of $445-$455 million (unchanged).

However, the EBITDA guidance was raised to $430-$445 million from $420-$440 million, excluding amortization costs, implying year-over-year growth of 37% to 41%.

The company expects adjusted earnings in the range of $2.70-$2.80 per share, up from $2.65-$2.75 per share (excluding stock-based compensation expenses), indicating an improvement of 22% to 27% year over year. Halozyme’s earnings per share guidance does not consider the impact of potential future share repurchases.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

VGM Scores

At this time, Halozyme Therapeutics has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Halozyme Therapeutics 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

Halozyme Therapeutics is part of the Zacks Medical - Biomedical and Genetics industry. Over the past month, Karuna Therapeutics, Inc. (KRTX - Free Report) , a stock from the same industry, has gained 15.9%. The company reported its results for the quarter ended September 2023 more than a month ago.

Karuna Therapeutics, Inc. reported revenues of $0 million in the last reported quarter, representing a year-over-year change of -100%. EPS of -$3.16 for the same period compares with -$2.38 a year ago.

For the current quarter, Karuna Therapeutics, Inc. is expected to post a loss of $2.63 per share, indicating a change of -18.5% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.8% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Karuna Therapeutics, Inc. Also, the stock has a VGM Score of F.


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