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Agios Pharmaceuticals (AGIO) Q3 Earnings: What's in Store?

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Agios Pharmaceuticals, Inc. (AGIO - Free Report) is scheduled to report third-quarter results on Nov 1, before the opening bell.

Shares have surged 57.9% so far this year, comparing favorably with the industry’s increase of 22.7%.

Agios’ earnings track record shows mixed results with the company having missed estimates twice in the trailing four quarters and also surpassed the same twice. Overall, Agios has an average positive surprise of 0.34%. Last quarter, the company delivered a negative surprise of 17.11%.

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

Factors at Play

Agios’ only marketed drug is Idhifa (enasidenib) for treatment of patients with relapsed or refractory acute myeloid leukemia (AML) with an isocitrate dehydrogenase-2 (IDH2) mutation.

Idhifa received the FDA approval earlier in August and was launched soon after.

The company expects to draw revenues for the first time from Idhifa this to-be-reported quarter after the drug’s FDA approval. We expect management to update on commercialization/launch plans of Idhifa at the third-quarter conference call. Investors’ focus will also be on Agios’ pipeline over there. Its cancer pipeline includes AG-120 (IDH1 mutant inhibitor) and AG-881 (pan-IDH mutant inhibitor).

A phase III study on AG-120 is currently on for front-line AML patients with an IDH1 mutation. The company plans for an NDA submission in the United States by this year-end. On the other hand, Agios is conducting phase I studies on AG-881 for treating patients with advanced IDH1 or IDH2 mutant-positive solid tumors, including glioma. The FDA granted a fast track designation to the candidate for the given indication.

Notably, Agios is busy developing AG-881 in collaboration with Celgene Corporation , which should fetch in collaboration revenues.

Earlier in August, the company completed an agreement with global regulators to advance its lead candidate AG-348, in its rare genetic metabolic disorders (RGD) portfolio into two pivotal trials for treatment of patients with Pyruvate kinase (PK) deficiency. The studies are expected to start in the first half of 2018.

Earnings Whispers

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

Zacks ESP: Agios has an Earnings ESP of -2.06% that represents the difference between the Most Accurate estimate of a loss of $1.78 and the Zacks Consensus Estimate of a loss of $1.74. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Agios has a Zacks Rank #2, which increases the predictive power of ESP. However, a company needs to have a positive ESP to be confident about an earnings surprise. Hence, this leaves the case inconclusive.

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

Stocks That Warrant a Look

Here are some health care stocks worth considering as these consist of the right combination of elements to surpass expectations this quarter:

Emergent Biosolutions, Inc. (EBS - Free Report) , which is scheduled to release results on Nov 2, has an Earnings ESP of +9.09% and also carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zoetis Inc. (ZTS - Free Report) is scheduled to release results on Nov 2. The Zacks #2 Ranked company has an Earnings ESP of +0.57%.

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