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Intrexon (XON): Will the Stock Pull a Surprise in Q3 Earnings?

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Intrexon Corporation (XON - Free Report) is scheduled to report third-quarter 2016 results on Nov 9, after the market closes.

In the last reported quarter, the company posted a negative surprise of 26.09%. Let’s see how things have shaped up before the announcement.

Factors to Consider

Being a leader in the synthetic biology, Intrexon applies engineering principles to biological systems that enable the rational, design-based control of cellular function for a specific purpose across five key sectors – health, food, energy, environment and consumer.

Intrexon’s top line comprises mainly of collaboration and license fees, product revenues and service revenues.

The company follows a business model under which it commercializes its technologies through exclusive channel collaborations (ECC), licensing agreements and joint ventures with collaborators that have market and product development expertise, as well as sales and marketing capabilities to bring new and improved products and processes to market. Such agreements provide the company with funds in the form of technology access fees, and milestones and other payments.

We expect collaboration revenues to continue contributing significantly to the company’s top line in the third quarter.

Moreover, Intrexon has been very active on striking new ECCs and expanding its partnership with the existing ones. In Sep 2016, the company entered into an ECC with two startup companies – Genten Therapeutics, Inc. and CRS Bio, Inc. In the upcoming conference call, we expect the company to shed more light on the agreement front.

Meanwhile, the company is working with both governmental and non-governmental organizations for the potential use of Oxitec's OX513A to reduce or eradicate populations of the Aedes aegypti mosquito, the primary vector for dengue, chikungunya and the Zika virus.

We expect investors to focus on the company’s performance along with other developmental updates.

Surprise History

Intrexon’s performance has been mostly disappointing, with the company missing estimates in three of the four trailing quarters with an average negative earnings surprise of 16.72%.

INTREXON CORP Price and EPS Surprise



What Our Model Indicates

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

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at a loss of 24 cents. Please check our Earnings ESP Filter that enables you find stocks that are expected to come out with earnings surprises.

Zacks Rank: Though Intrexon has a favorable Zacks Rank #3, its 0.00% ESP makes surprise prediction difficult.

Note that 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.

Stocks that Warrant a Look

Here are some health care stocks that you may want to consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter.

The Earnings ESP for OncoCyte Corporation (OCX - Free Report) is +10.00% and it carries a Zacks Rank #3. The company is scheduled to release results on Nov 10 after the market closes.

Tokai Pharmaceuticals, Inc. is expected to release third-quarter results on Nov 8. The company has an Earnings ESP of is +18.42% and it carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Synergy Pharmaceuticals, Inc. (SGYP - Free Report) is expected to report third-quarter results on Nov 14. It has an Earnings ESP of +18.18% and a Zacks Rank #3.

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