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Conatus (CNAT) May Surprise in Q2 Earnings: Stock to Gain?
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Conatus Pharmaceuticals Inc. is scheduled to report second-quarter 2016 results on Aug 3, after the market closes. Conatus’ performance so far has been mixed with the company surpassing expectations on two occasions, while posting in-line results in the other two. Overall, the company has posted an average beat of 9.72%.
In the last reported quarter, Conatus’ results came in line with the expectations. Let’s see how things are shaping up for the second quarter of 2016.
Emricasan in Focus
Conatus, a development-stage biotech company, is focused on the development and commercialization of treatments targeting liver disease. The company’s lead candidate, emricasan, a first-in-class, orally active pan-caspase protease inhibitor, is being developed for the treatment of patients suffering from chronic liver disease.
Currently, two phase II studies on emricasan are underway. This includes the POLT-HCV-SVR study (phase IIb) evaluating potential improvements in Ishak fibrosis score in post-orthotropic liver transplant (POLT) recipients with liver fibrosis or cirrhosis post-transplant caused by recurrent hepatitis C virus (HCV) infection in those who have successfully achieved a sustained viral response (SVR) following HCV antiviral therapy and the ENCORE-NF study (phase IIb) evaluating potential improvements in fibrosis and steatohepatitis in patients with non-alcoholic steatohepatitis (NASH) fibrosis.
During the quarter (May 2016), Conatus announced positive top-line data from the three-month, open-label, second stage of the phase II liver cirrhosis study on emricasan. The company intends to discuss these results with regulatory authorities in the second half of 2016 and thereafter plans to commence the ENCORE-LF study in patients with NASH cirrhosis.
Conatus also plans to initiate other additional studies on emricasan. Meanwhile, operating expenses at the company are expected to rise, particularly research and development expenses, due to continued investment toward the development of emricasan.
With no approved product in Conatus’ portfolio at the moment, investor focus is expected to remain on the company’s progress with emricasan.
Why a Likely Positive Surprise?
For the second quarter of 2016, our proven model shows that Conatus is likely to beat estimates because it has the right combination of two key ingredients.
Positive Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +5.41%. This is a meaningful and leading indicator of a likely positive surprise for the shares.
Zacks Rank #3 (Hold): Note that stocks with Zacks Ranks #1 (Strong Buy), #2 (Buy) and #3 have a significantly higher chance of beating estimates. However, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
The combination of Conatus’ Zacks Rank #3 and +5.41% ESP makes us reasonably confident of a beat this season.
Conatus is not the only company looking up this earnings season. Here are some other health care stocks that you may want to consider as our model shows that they too have the right combination of elements to post an earnings beat this quarter.
Exelixis, Inc. (EXEL - Free Report) has an Earnings ESP of +3.70% and carries a Zacks Rank #3. The company is scheduled to report second-quarter results on Aug 3.
Intercept Pharmaceuticals, Inc. has an Earnings ESP of +5.05% and carries a Zacks Rank #3. It is scheduled to report second-quarter results on Aug 4.
BioMarin Pharmaceutical Inc. (BMRN - Free Report) has an Earnings ESP of +4.00% and carries a Zacks Rank #3. It is also scheduled to report second-quarter results on Aug 4.
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Conatus (CNAT) May Surprise in Q2 Earnings: Stock to Gain?
Conatus Pharmaceuticals Inc. is scheduled to report second-quarter 2016 results on Aug 3, after the market closes. Conatus’ performance so far has been mixed with the company surpassing expectations on two occasions, while posting in-line results in the other two. Overall, the company has posted an average beat of 9.72%.
In the last reported quarter, Conatus’ results came in line with the expectations. Let’s see how things are shaping up for the second quarter of 2016.
Emricasan in Focus
Conatus, a development-stage biotech company, is focused on the development and commercialization of treatments targeting liver disease. The company’s lead candidate, emricasan, a first-in-class, orally active pan-caspase protease inhibitor, is being developed for the treatment of patients suffering from chronic liver disease.
Currently, two phase II studies on emricasan are underway. This includes the POLT-HCV-SVR study (phase IIb) evaluating potential improvements in Ishak fibrosis score in post-orthotropic liver transplant (POLT) recipients with liver fibrosis or cirrhosis post-transplant caused by recurrent hepatitis C virus (HCV) infection in those who have successfully achieved a sustained viral response (SVR) following HCV antiviral therapy and the ENCORE-NF study (phase IIb) evaluating potential improvements in fibrosis and steatohepatitis in patients with non-alcoholic steatohepatitis (NASH) fibrosis.
During the quarter (May 2016), Conatus announced positive top-line data from the three-month, open-label, second stage of the phase II liver cirrhosis study on emricasan. The company intends to discuss these results with regulatory authorities in the second half of 2016 and thereafter plans to commence the ENCORE-LF study in patients with NASH cirrhosis.
Conatus also plans to initiate other additional studies on emricasan. Meanwhile, operating expenses at the company are expected to rise, particularly research and development expenses, due to continued investment toward the development of emricasan.
With no approved product in Conatus’ portfolio at the moment, investor focus is expected to remain on the company’s progress with emricasan.
Why a Likely Positive Surprise?
For the second quarter of 2016, our proven model shows that Conatus is likely to beat estimates because it has the right combination of two key ingredients.
Positive Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +5.41%. This is a meaningful and leading indicator of a likely positive surprise for the shares.
Zacks Rank #3 (Hold): Note that stocks with Zacks Ranks #1 (Strong Buy), #2 (Buy) and #3 have a significantly higher chance of beating estimates. However, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
The combination of Conatus’ Zacks Rank #3 and +5.41% ESP makes us reasonably confident of a beat this season.
CONATUS PHARMA Price and EPS Surprise
CONATUS PHARMA Price and EPS Surprise | CONATUS PHARMA Quote
Other Stocks That Warrant a Look
Conatus is not the only company looking up this earnings season. Here are some other health care stocks that you may want to consider as our model shows that they too have the right combination of elements to post an earnings beat this quarter.
Exelixis, Inc. (EXEL - Free Report) has an Earnings ESP of +3.70% and carries a Zacks Rank #3. The company is scheduled to report second-quarter results on Aug 3.
Intercept Pharmaceuticals, Inc. has an Earnings ESP of +5.05% and carries a Zacks Rank #3. It is scheduled to report second-quarter results on Aug 4.
BioMarin Pharmaceutical Inc. (BMRN - Free Report) has an Earnings ESP of +4.00% and carries a Zacks Rank #3. It is also scheduled to report second-quarter results on Aug 4.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>