Incyte Corporation (INCY Quick QuoteINCY - Free Report) is scheduled to release fourth-quarter and full-year 2023 results on Feb 13, before the opening bell.

The company's earnings beat estimates in three of the trailing four quarters and missed the same on the remaining occasion, delivering an average negative surprise of 9.17%. In the last reported quarter, INCY came up with an earnings surprise of 0.92%.

Let's see how things might have shaped up for the quarter to be reported.

Factors to Consider

Incyte primarily derives product revenues from sales of its lead drug, Jakafi (ruxolitinib), in the United States and its other marketed drugs.

An increase in sales of Jakafi, a first-in-class JAK1/JAK2 inhibitor in all approved indications (polycythemia vera, myelofibrosis and refractory acute graft-versus-host disease [GvHD]), is likely to have boosted revenues in the fourth quarter. However, competition might have dented sales growth somewhat.

The Zacks Consensus Estimate for Jakafi's sales in fourth-quarter 2023 is pegged at $701 million.

Incyte earns product royalty revenues from Novartis AG (NVS Quick QuoteNVS - Free Report) for the commercialization of Jakafi in ex-U.S. markets. Novartis licensed ruxolitinib for its development and commercialization outside the United States.

While Incyte markets Jakafi in the United States, Novartis promotes the same drug as Jakavi outside the country. INCY is expected to have received higher royalties from NVS in the to-be-reported quarter on higher Jakavi sales.

Novartis reported strong performance of Jakavi in the fourth quarter, with sales of the drug witnessing a 14% increase. Hence, royalties from the same are likely to be higher.

Incyte also receives royalties from the sales of Tabrecta (capmatinib), which is approved for the treatment of adult patients with metastatic non-small cell lung cancer. Novartis has exclusive worldwide development and commercialization rights to Tabrecta.

Importantly, incremental sales from newly approved drugs like Opzelura (ruxolitinib) cream and Zynyz are expected to have boosted Incyte’s revenues in the fourth quarter.

In the last reported quarter, Opzelura sales grew 141% year over year, a trend that most likely continued in the to-be-reported quarter as well. The Zacks Consensus Estimate for Opzelura sales in the fourth quarter stands at $103 million.

Shares of Incyte have plunged 27.6% in the past year period compared with the industry’s decline of 11.8%.

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While Jakafi’s sales and royalties are the key catalysts for INCY’s revenue growth, sales of other drugs like Minjuvi, Pemazyre, Iclusig and Olumiant’s royalties from Eli Lilly are also likely to have contributed to Incyte’s top line in the to-be-reported quarter.

The Zacks Consensus Estimate for Iclusig, Minjuvi and Pemazyre sales in the fourth quarter stands at $26.79, $8.14 million and $19.86 million, respectively.

Higher research and development expenses, as well as increased selling and general and administrative costs, are likely to have escalated operating expenses in the to-be-reported quarter.

Based on the tepid Jakafi sales, INCY tightened the sales guidance for the drug in the last reported quarter. Investors will be keen to get an update on the same during the upcoming earnings call.

Earnings Whisper

Our proven model does not conclusively predict an earnings beat for Incyte this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. Unfortunately, that is not the case here, as you will see below. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Earnings ESP: Incyte has an Earnings ESP of +2.27% as the Most Accurate Estimate stands at $1.24 per share and the Zacks Consensus Estimate stands at $1.21 per share.

Zacks Rank: Incyte currently carries a Zacks Rank #4 (Sell).

Stocks to Consider

Here are a few stocks worth considering from the healthcare space, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.

Intellia Therapeutics, Inc. (NTLA Quick QuoteNTLA - Free Report) has an Earnings ESP of +31.10% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Intellia Therapeutics’ stock has plunged 31.3% in the past year. NTLA beat earnings estimates in two of the last four quarters, met the same once and missed on the remaining occasion. Intellia Therapeutics delivered an earnings surprise of 5.04%, on average.

Alkermes, Inc. (ALKS Quick QuoteALKS - Free Report) has an Earnings ESP of +8.88% and a Zacks Rank #3.

Alkermes’ stock has declined 1.2% in the past year. ALKS beat earnings estimates in each of the last four quarters. Alkermes delivered an earnings surprise of 93.34%, on average. ALKS will report its fourth-quarter results on Feb 15.