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We expect BioMarin Pharmaceutical Inc. (BMRN - Free Report) to beat expectations when it reports second-quarter 2017 results on Aug 2, after the market closes. BioMarin delivered a positive earnings surprise of 110% in the last quarter.

BioMarin’s shares are up 7.7% so far this year. This compares unfavorably with the 12.0% increase registered by the industry during this period.

However, BioMarin’s earnings track record has been strong, with the company beating estimates in each of the past four quarters, delivering an average positive surprise of 64.95%.

Let’s see how things are shaping up for the company this quarter

Factors at Play

Key orphan disease drugs, Vimizim and Kuvan, which drove BioMarin’s top line in the past few quarters, are likely to sustain the strong momentum this quarter too. Robust patient growth and penetration should propel the drugs’ sales.

Naglazyme and Vimzin revenues vary on a quarterly basis, primarily due inconsistent ordering patterns from some countries like Brazil. These factors may hurt international revenues in the second quarter as well.

Nevertheless, the drugs continue to witness steady patient growth and we expect the trend to continue this year.

Brineura, for the treatment of children with CLN2 disease, a form of Batten disease, was approved in both the U.S. and EU this year. The drug may bring in some sales this quarter.

We expect management to discuss how the pipeline is progressing at the conference call. Several data readouts are also lined up in the coming quarters.

Importantly at the Q1 call, the company had said that R&D and SG&A spending may increase in the later quarters of the year, which will dent profits. This will be due to the ramp up of BMN 270 and vosoritide pipeline programs and the Brineura launch and pegvaliase pre-commercialization activities

What Our Model Indicates

Our proven model shows that BioMarin is likely to beat estimates because it has the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for a likely positive surprise and BioMarin has the right mix.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate (loss of 21 cents per share) and the Zacks Consensus Estimate ( loss of 22 cents per share), is +4.55%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: BioMarin has a Zacks Rank #3. The combination of BioMarin’s Zacks Rank #3 and positive ESP makes us confident of an earnings beat in the upcoming release.

Sell-rated stocks (Zacks Rank #4 or 5), on the other hand, should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Stocks in the biotech sector that have both a positive ESP and a favorable Zacks Rank are:

Clovis Oncology, Inc. (CLVS - Free Report) , which is scheduled to release results on Aug 2, has an Earnings ESP of +6.30% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Intercept Pharmaceuticals, Inc. (ICPT - Free Report) with an Earnings ESP of +9.39% and a Zacks Rank #3. The company is scheduled to release results on Jul 31.

Puma Biotechnology, Inc. (PBYI - Free Report) has an Earnings ESP of +3.33% and a Zacks Rank #3. It is expected to release results on Aug 8. 

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