Shire plc reported first-quarter 2017 earnings of $3.63 per American Depositary Share (ADS), beating the Zacks Consensus Estimate of $3.22 and up 13.8% from the year-ago quarter figure of $3.19.
Revenues, on the other hand, surged 109% to $3.57 billion and beat the Zacks Consensus Estimate of $3.56 billion marginally
Shire’s shares have performed better than the Zacks classified Medical-Drugs industry so far this year. The stock gained 8% during this time compared with the industry’s 5.3% rise.
Quarter in Detail
Product sales soared 110% year over year to $3.4 billion primarily due to the inclusion of $1.6 billion of legacy Baxalta sales. Excluding Baxalta, product sales were up 11% driven by strong performance of Genetic Diseases (up 14%) and Internal Medicine (up 9%).
Royalties and other revenues were up 95% to $160 million primarily due to the inclusion of contract manufacturing revenues acquired as part of the Baxalta transaction.
The company’s Ophthalmology franchise contributed $38.6 million to total product sales and acquired 22% of the U.S. market (as of Mar 2017), following the launch of Xiidra in Aug 2016. Xiidra, a twice-daily eye drop solution, is approved in the U.S. for the treatment of dry eye disease.
Vyvanse sales increased 11% to $563.7 million, primarily attributable to growth in international market. Sales of Lialda came in at $175.1 million, up 4%. However, sales of Adderall XR decreased 34% primarily due to additional generic competition.
While sales of Firazyr remained flat at $128.5 million, Cinryze sales increased 38% to $225.9 million from $164.2million in the year-ago quarter due to an increase in the number of patients on therapy and supply improvements. Moreover, Elaprase sales increased 14% to $140.6 million attributable to an increase in the number of patients on therapy and large international orders in this quarter. Also, Kalbitor sales increased 13% to $11.7 million.
Gattex and Natpara also performed well with sales increasing 33% and 90% to $69 million and $29.7 million, respectively. Oncology sales added $58 million to total revenue.
Gross margin (adjusted) declined to 78.3% from 86.7% in the year-ago quarter. Research and development (R&D) costs were up 74.7% to $379.3 million primarily due to the inclusion of cost related to Baxalta. Selling, general & administrative (SG&A) expenses increased 87.2% to $888.9 million, primarily due to the inclusion of Baxalta related costs and XIIDRA marketing costs.
2017 Outlook Reiterated
Shire expects earnings per ADS in the range of $14.60–$15.20. Product sales are projected between $14.5 billion and $14.8 billion. The company forecasts royalties and other revenues of around $600–$700 million, including contract manufacturing revenues from Baxalta. Gross margin is estimated between 74.5% and 76.5%.
Pipeline Update
Shire continues to progress with its pipeline candidates. In Jan 2017, the company announced that the FDA had acknowledged receipt of the Class 2 resubmission of a New Drug Application (NDA) for SHP465, for the treatment of ADHD. The FDA is expected to provide a decision on or around Jun 20.
Shire also announced that the Committee for Medicinal Products for Human Use (CHMP) has adopted a positive opinion recommending the granting of Conditional Marketing Authorisation for Natpar while the European Commission (EC) approved a label extension for Cinryze for use in pediatrics.
In Mar 2017, Shire announced that the FDA has granted Fast Track designation for recombinant ADAMTS13 (SHP655) for the treatment of acute episodes of hereditary thrombotic thrombocytopenic purpura (hTTP) and approved its ADHD drug, Intuniv from the Japanese Ministry of Health, Labor and Welfare
Our Take
Shire’s first-quarter results were encouraging with the company beating both top- and bottom-line estimates driven by the Baxalta acquisition. The approval of Xiidra has also boosted the company’s ophthalmology space. Strong performance of Vyvanse, Cinryze and Elaprase should continue to drive its top line in the upcoming quarters. However, sales of Lialda continue to lag due to additional generic competition.
The approval of Xiidra boosted the company’s ophthalmology space. The uptake has been strong with over 400,000 prescriptions and roughly 22% of the total market by the end of Mar 2017. The drug will also be filed for approval in Europe in third-quarter 2017. The Dyax acquisition has integrated well and Shire expects results from the phase III trial on SHP643 in the second quarter of 2017.
Zacks Rank & Key Picks
Shire currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the healthcare sector are Infinity Pharmaceuticals, Inc. , Corium International, Inc. and Nivalis Therapeutics, Inc. . While Infinity sports a Zacks Rank #1 (Strong Buy), Corium and Nivalis carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Infinity’s loss estimates narrowed by 28% for 2017 and 13.1% for 2018, respectively, over the past 60 days. The company recorded a positive earnings surprise in three of the last four quarters, with the average being 36.64%. Its share price has increased 43.7% year to date.
Corium’s loss estimates narrowed from $1.70 to $1.69 for 2017 and from $1.48 to $1.47 for 2018 over the past 60 days. Its share price has increased 11.3% year to date.
Nivalis’ loss estimates narrowed 23.5% for 2017 and 16.2% for 2018 over the last 60 days. The company posted a positive earnings surprise in three of the four trailing quarters with an average beat of 12.26%. Its share price increased 3.1% year to date.
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Shire (SHPG) Beats on Q1 Earnings & Sales, Reiterates View
Shire plc reported first-quarter 2017 earnings of $3.63 per American Depositary Share (ADS), beating the Zacks Consensus Estimate of $3.22 and up 13.8% from the year-ago quarter figure of $3.19.
Revenues, on the other hand, surged 109% to $3.57 billion and beat the Zacks Consensus Estimate of $3.56 billion marginally
Shire’s shares have performed better than the Zacks classified Medical-Drugs industry so far this year. The stock gained 8% during this time compared with the industry’s 5.3% rise.
Quarter in Detail
Product sales soared 110% year over year to $3.4 billion primarily due to the inclusion of $1.6 billion of legacy Baxalta sales. Excluding Baxalta, product sales were up 11% driven by strong performance of Genetic Diseases (up 14%) and Internal Medicine (up 9%).
Royalties and other revenues were up 95% to $160 million primarily due to the inclusion of contract manufacturing revenues acquired as part of the Baxalta transaction.
The company’s Ophthalmology franchise contributed $38.6 million to total product sales and acquired 22% of the U.S. market (as of Mar 2017), following the launch of Xiidra in Aug 2016. Xiidra, a twice-daily eye drop solution, is approved in the U.S. for the treatment of dry eye disease.
Vyvanse sales increased 11% to $563.7 million, primarily attributable to growth in international market. Sales of Lialda came in at $175.1 million, up 4%. However, sales of Adderall XR decreased 34% primarily due to additional generic competition.
While sales of Firazyr remained flat at $128.5 million, Cinryze sales increased 38% to $225.9 million from $164.2million in the year-ago quarter due to an increase in the number of patients on therapy and supply improvements. Moreover, Elaprase sales increased 14% to $140.6 million attributable to an increase in the number of patients on therapy and large international orders in this quarter. Also, Kalbitor sales increased 13% to $11.7 million.
Gattex and Natpara also performed well with sales increasing 33% and 90% to $69 million and $29.7 million, respectively. Oncology sales added $58 million to total revenue.
Gross margin (adjusted) declined to 78.3% from 86.7% in the year-ago quarter. Research and development (R&D) costs were up 74.7% to $379.3 million primarily due to the inclusion of cost related to Baxalta. Selling, general & administrative (SG&A) expenses increased 87.2% to $888.9 million, primarily due to the inclusion of Baxalta related costs and XIIDRA marketing costs.
2017 Outlook Reiterated
Shire expects earnings per ADS in the range of $14.60–$15.20. Product sales are projected between $14.5 billion and $14.8 billion. The company forecasts royalties and other revenues of around $600–$700 million, including contract manufacturing revenues from Baxalta. Gross margin is estimated between 74.5% and 76.5%.
Pipeline Update
Shire continues to progress with its pipeline candidates. In Jan 2017, the company announced that the FDA had acknowledged receipt of the Class 2 resubmission of a New Drug Application (NDA) for SHP465, for the treatment of ADHD. The FDA is expected to provide a decision on or around Jun 20.
Shire also announced that the Committee for Medicinal Products for Human Use (CHMP) has adopted a positive opinion recommending the granting of Conditional Marketing Authorisation for Natpar while the European Commission (EC) approved a label extension for Cinryze for use in pediatrics.
In Mar 2017, Shire announced that the FDA has granted Fast Track designation for recombinant ADAMTS13 (SHP655) for the treatment of acute episodes of hereditary thrombotic thrombocytopenic purpura (hTTP) and approved its ADHD drug, Intuniv from the Japanese Ministry of Health, Labor and Welfare
Our Take
Shire’s first-quarter results were encouraging with the company beating both top- and bottom-line estimates driven by the Baxalta acquisition. The approval of Xiidra has also boosted the company’s ophthalmology space. Strong performance of Vyvanse, Cinryze and Elaprase should continue to drive its top line in the upcoming quarters. However, sales of Lialda continue to lag due to additional generic competition.
The approval of Xiidra boosted the company’s ophthalmology space. The uptake has been strong with over 400,000 prescriptions and roughly 22% of the total market by the end of Mar 2017. The drug will also be filed for approval in Europe in third-quarter 2017. The Dyax acquisition has integrated well and Shire expects results from the phase III trial on SHP643 in the second quarter of 2017.
Shire PLC Price, Consensus and EPS Surprise
Shire PLC Price, Consensus and EPS Surprise | Shire PLC Quote
Zacks Rank & Key Picks
Shire currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the healthcare sector are Infinity Pharmaceuticals, Inc. , Corium International, Inc. and Nivalis Therapeutics, Inc. . While Infinity sports a Zacks Rank #1 (Strong Buy), Corium and Nivalis carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Infinity’s loss estimates narrowed by 28% for 2017 and 13.1% for 2018, respectively, over the past 60 days. The company recorded a positive earnings surprise in three of the last four quarters, with the average being 36.64%. Its share price has increased 43.7% year to date.
Corium’s loss estimates narrowed from $1.70 to $1.69 for 2017 and from $1.48 to $1.47 for 2018 over the past 60 days. Its share price has increased 11.3% year to date.
Nivalis’ loss estimates narrowed 23.5% for 2017 and 16.2% for 2018 over the last 60 days. The company posted a positive earnings surprise in three of the four trailing quarters with an average beat of 12.26%. Its share price increased 3.1% year to date.
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Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>