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Why Is Denali Therapeutics Inc. (DNLI) Down 5.2% Since Last Earnings Report?

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It has been about a month since the last earnings report for Denali Therapeutics Inc. (DNLI - Free Report) . Shares have lost about 5.2% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Denali Q3 Earnings Beat

Denali posted a loss of 72 cents per share for third-quarter 2023, narrower than the Zacks Consensus Estimate of a loss of 83 cents per share. The company recorded a loss of 84 cents in the year-ago quarter.

Collaboration revenues totaled $1.3 million in the reported quarter, missing the Zacks Consensus Estimate of $11 million and down from $4 million recorded in the year-ago quarter.

Quarter in Detail

Research and development expenses increased 2.2% to $89.7 million in the quarter under review. This was due to an increase in ETV:IDS and eIF2B programs’ external expenses and an increase in personnel-related expenses, including stock-based compensation, mainly driven by higher headcount and equity award grants.

General and administrative expenses increased 8.5% to $25.3 million. This was primarily attributable to an increase in personnel-related expenses, including employee compensation and stock-based compensation expenses, driven by higher headcount and equity award grants.

Cash, cash equivalents and marketable securities totaled $1.12 billion as of Sep 30, 2023.
 

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 7.29% 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, BioMarin Pharmaceutical (BMRN - Free Report) , a stock from the same industry, has gained 10.1%. The company reported its results for the quarter ended September 2023 more than a month ago.

BioMarin reported revenues of $581.33 million in the last reported quarter, representing a year-over-year change of +15%. EPS of $0.46 for the same period compares with $0.45 a year ago.

BioMarin is expected to post earnings of $0.44 per share for the current quarter, representing a year-over-year change of +22.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -3.4%.

BioMarin has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.


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