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Ligand (LGND) Up 9.6% Since Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Ligand Pharmaceuticals Incorporated (LGND - Free Report) . Shares have added about 9.6% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Ligand Q2 Earnings & Revenues Top, 2017 View Raised

Ligand Pharmaceuticals reported second-quarter 2017 earnings of 67 cents per share, significantly up 91.4% from the year-ago figure of 35 cents. Earnings also beat the Zacks Consensus Estimate of 40 cents per share. Lower costs and higher revenues boosted earnings in the quarter.

Total revenue in the quarter surged 40% year over year to $28 million on the back of higher royalty revenues. Revenues also surpassed the Zacks Consensus Estimate of $24 million.

Quarterly Highlights

Royalty revenues were $14.2 million in the reported quarter, up approximately 46% year over year. Higher royalties on sales of Novartis’s Promacta and Amgen’s Kyprolis as well as Spectrum Pharmaceuticals’ Evomela drove this upside.

Material sales also soared by 43.6% to $5.6 million owing to the favorable timing of Captisol purchases for clinical and commercial use.

License and milestone revenues were $8.2 million, thus registering a massive rise of 39.5% compared with $5.9 million in the year-ago period. This increase was courtesy the favorable timing of milestones and license fees earned.

Research & development (R&D) expenses marginally decreased by 2% to $4.8 million. General & administrative expenses reduced 9.7% year over year to $6.5 million.

2017 Outlook

Ligand raised its 2017 revenue and earnings outlook. The company now expects earnings of approximately $2.93 per share in 2017 compared with $2.70, expected previously. The company anticipates its revenues to be $133 million for 2017 compared with $130 million, estimated previously. The core revenues are projected to comprise royalties of approximately $87 million, material sales of approximately $23 million and contract payments of at least $23 million (old guidance: $20 million).

The company is expected to receive additional contract revenues of approximately $9 million in 2017.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.

VGM Scores

At this time, Ligand's stock has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Zacks''style scores indicate that the company's stock is suitable for growth and momentum investors.

Outlook

The stock has a Zacks Rank #1 (Strong Buy). We are looking for an above average return from the stock in the next few months.




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