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Will BioDelivery (BDSI) Stock Disappoint in Q3 Earnings?

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BioDelivery Sciences International, Inc. (BDSI - Free Report) is scheduled to report third-quarter 2016 results on Nov 9, before the opening bell. Last quarter, the company’s loss was in line with expectations.

BioDelivery’s recent performance has been disappointing, with the company missing expectations in two of the last four quarters while posting in-line results in the remaining two. The average negative earnings surprise for the last four quarters is 19.59%.

BIODELIVERY SCI Price and EPS Surprise



Let’s see how things are shaping up for this announcement.

Factors to Consider

BioDelivery’s key products include Belbuca (chronic pain) and Bunavail (opioid-dependence). Bunavail’s performance lacked luster in the first half of 2016. However, Bunavail’s scrip trends were flat sequentially in the second quarter compared to a decline in the first quarter. Also, overall unit sales increased 2% helped by the sales force reduction that took place in May.

With the product not yielding the expected results, BioDelivery decided to reduce spending on the drug. From May 2016, BioDelivery cut the size and altered the structure of its sales force to focus on the most-profitable territories in the country where Bunavail has or is in the best position to obtain marketplace growth. This move resulted in a reduction from sixty-five to forty territories.

Moreover, since July, the company improved positioning in six new managed care contracts, providing preferred access to Bunavail. The improved prescription potential in these six new managed care contracts should boost sales and profitability of Bunavail.

Also, several government initiatives have been taken in the past few months to address the national opioid epidemic and limitations on access to care and treatment with buprenorphine. These initiatives should attract new patients and can result in the prescription growth of Bunavail in the third quarter.

Meanwhile, Belbuca’s start has been slower than expected due to pain market pressures. On the first-quarter call, BioDelivery had said that its partner Endo International plc (ENDP - Free Report) expects an inflection point in the second half of 2016.

Apart from the performance of these two products and the company’s cost-control efforts, investor focus will remain on the pipeline.

Earnings Whispers

Our proven model does not conclusively show that BioDeliveryis likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.

Zacks ESP: The Earnings ESP is 0.0% as both the Most Accurate estimate as well as the Zacks Consensus Estimate is pegged at a loss of 26 cents. Please check our Earnings ESP Filter that enables you find stocks that are expected to come out with earnings surprises.

Zacks Rank: BioDelivery has a Zacks Rank #4. We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

AveXis, Inc. is scheduled to release results on Nov 10. The company has an Earnings ESP of 11.43% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Global Blood Therapeutics, Inc. (GBT - Free Report) with an Earnings ESP of +16.95% and a Zacks Rank #2. The company is expected to release results on Nov 10.

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