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United Therapeutics (UTHR) Up 3.9% Since Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for United Therapeutics Corporation (UTHR - Free Report) . Shares have added about 3.9% in that time frame.

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

United Therapeutics Q1 Earnings Rise, Sales Drop Sequentially

Adjusted earnings of $3.76 per share for the first quarter of 2018 rose 4% from the year-ago quarter due to lower SG&A costs and tax rate. The Zacks Consensus Estimate was pegged at $3.46 per share. Adjusted earnings excluded the impact of share-based compensation gains.

Revenues for the reported quarter were $389.2 million, beating the Zacks Consensus Estimate of $385 million. Revenues rose 5% year over year. Sales, however, declined 16.3% sequentially due to unfavorable timing/pricing of distributor orders.

United Therapeutics’ first-quarter revenues are usually down or flat from the prior-year fourth quarter’s levels due to unfavorable timing and magnitude of distributor orders, which are typically placed once a month based on current utilization trends and contractual minimum inventory requirements.

The Quarter in Detail

United Therapeutics markets four products for the treatment of PAH – Remodulin, Tyvaso, Adcirca and Orenitram.

Adcirca sales were $97.6 million, up 22% year over year driven by price increases.

Orenitram sales amounted to $52.2 million in the quarter, up 33% year over year due to patient growth and a one-time positive impact from an amendment in contractual minimum inventory levels with an U.S. distributor. Remodulin sales were $126.8 million, down 13% year over year due a reduction in orders from U.S. and international distributors. Tyvaso sales totaled 94.6 million, up 8% year over year due to price increases. However, the amendment in contractual minimum inventory levels, discussed above, hurt sales of both Remodulin and Tyvaso.

Unituxin’s (for the treatment of pediatric patients with high-risk neuroblastoma) sales of $18.0 million were flat year over year.

Research and development (R&D) expenses escalated 41% to $58.2 million due to higher costs to support the company’s pipeline of cardiopulmonary and cancer drugs and to develop its organ manufacturing projects.

Selling, general and administrative (SG&A) expenses declined 4% to $66.1 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There have been five revisions lower for the current quarter.

VGM Scores

At this time, UTHR has a strong Growth Score of A, a grade with the same score on the momentum front. The stock was also allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

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

Based on our scores, the stock is equally suitable for value, growth and momentum investors.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, UTHR has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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