Jazz Pharmaceuticals plc (JAZZ - Free Report) is scheduled to report fourth-quarter results on Feb 27 after market close.
Shares of the company have outperformed the industry in a year’s time. The stock has gained 6.5% against the industry’s 0.4% decrease.
Jazz has been showcasing a mixed earnings history of late. The company surpassed estimates in two of the last four quarters, missing in the other two with an average beat of 1.71%. Last quarter, the company delivered a positive surprise of 11.42%.
Let’s see, how things have shaped up for this quarter:
Factors at Play
On fourth-quarter conference call, investors will be looking forward to management’s comments on Xyrem’s performance, Jazz’s lead product for cataplexy and excessive daytime sleepiness (EDS). Also, they will be pinning hopes on the company’s pipeline progress. Its business development plans too are expected to draw attention.
Xyrem delivered lower-than-expected sales in the third quarter of 2017, which compelled the company to cut its guidance for 2017.
However, Jazz is striving to expand Xyrem’s label. The company reported positive top-line data from a phase III study on children and adolescents with EDS in mid-2017. It is also planning to submit a supplemental new drug application (sNDA) for Xyrem to get an approval for the pediatric population by mid-2018.
The company’s another drug, Defitelio (veno-occlusive disease), was launched in the United States in early April 2016. Though the drug's performance was soft in the first half of 2017, it showed improvement in the third quarter, an uptrend which we expect to continue in the fourth as well.
However, Jazz has been facing challenges in building sufficient inventory levels for another product, Erwinaze, due to constrained manufacturing capacity. Also, there might have been supply disruptions in certain markets for the company in the soon-to-be-reported quarter including the United States and beyond.
Noticeably, there was no report of significant sales from the company’s drug, Vyxeos, last quarter, which was launched in August 2017 in the U.S. market for treatment of adults with acute myeloid leukemia (AML). However, the drug is expected to generate some decent revenues in the to-be-reported quarter, given the company’s aggressive commercialization efforts for the same.
Also, Jazz’s lead pipeline candidate, JZP-110, complements its existing sleep disorder portfolio. It has been developed for treatment of EDS. Moreover, the company submitted an NDA to the FDA for the candidate only last December.
Our proven model does not conclusively show that Jazz is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a solid 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: Jazz has an Earnings ESP of -1.95% that represents the percentage difference between the Most Accurate estimate of $2.92 and the Zacks Consensus Estimate of $2.98. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Jazz has a Zacks Rank #3, which increases the predictive power of ESP. However, the company needs a positive ESP to be confident about an earnings surprise. Hence, this combination leaves surprise prediction inconclusive.
We caution against 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 a couple of health care stocks with the right combination of elements to beat on earnings this time around:
Puma Biotechnology, Inc. (PBYI - Free Report) is slated to release fourth-quarter financial numbers on Mar 1. The company has an Earnings ESP of +2.02% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Gemphire Therapeutics (GEMP - Free Report) is expected to release fourth quarter 2017 results on Mar 21. The company has an Earnings ESP of +6.62% and a Zacks Rank #2.
Atara Biotherapeutics, Inc. (ATRA - Free Report) is expected to announce fourth-quarter results on Mar 8. The company has an Earnings ESP of +7.42% and a Zacks Rank #3.
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