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Why Is Horizon Pharma (HZNP) Up 18.3% Since Its Last Earnings Report?

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It has been about a month since the last earnings report for Horizon Pharma Public Limited Company (HZNP - Free Report) . Shares have added about 18.3% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is HZNP 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.

Horizon Pharma Q1 Earnings & Sales Miss

Horizon reported lower-than-expected results for the first quarter of 2018.

The company reported first-quarter adjusted earnings of 3 cents per share, which missed the Zacks Consensus Estimate of 11 cents and were much lower than 21 cents reported in the year-ago quarter.

Sales in the first quarter were up 1.4% year over year to $223.9 million but missed the Zacks Consensus Estimate of $239.45 million.

Quarter in Detail

The Orphan unit recorded revenues of $114.7 million, up 2% from the year-ago period. Growth in net sales of Ravicti, which generated $49.1 million in the quarter, up 12% year over year, was partially offset by lower sales of Actimmune, Buphenyl and Quinsair.

Additionally, Procysbi contributed to the performance with net sales of $34.9 million, up 2% year over year. Actimmune sales in the reported quarter were $24.9 million, down 5% year over year.

Procysbi’s lower sales growth and Quinsair declining sales were due to divestiture of marketing rights in Europe, the Middle East and Africa (“EMEA”) regions

The Rheumatology unit generated $57.5 million from sales, up 35% year over year. Also, Krystexxa sales in the quarter were strong and came in at $46.7 million, up 48% year over year, driven by strong and continued year-over-year vial demand.

Primary Care garnered revenues of $51.7 million, down 21% year over year. The decline in net sales was due to greater-than-anticipated seasonality impact and accrual of inventory in sales channel.

In the reported quarter, net sales of Pennsaid2%, Duexix and Vimovo were $26.8 million, $15.7 million and $8.4 million, respectively.

Adjusted research and development (R&D) expenses were up 40.3% to $15.2 million while adjusted selling, general and administrative expense was $146.1 million, up 10.4% year over year.

2018 Guidance Increased

Horizon Pharma raised its outlook for 2018. It now expects sales in the range of $1.17-$1.2 billion (previously $1.15-$1.18 billion), mainly driven by expected strong growth in its orphan and rheumatology business units, especially Krystexxa.

The company expects Krystexxa sales to increase 65% year over year in 2018 due to a one-year delay in implementation of the U.S. Government's Health Resource and Services Administration's Final Rule on 340B drug ceiling price to Jul 1, 2019.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to two lower. In the past month, the consensus estimate has shifted downward by 9.6% due to these changes.

Horizon Pharma Public Limited Company Price and Consensus

VGM Scores

At this time, HZNP has a poor Growth Score of F, however its Momentum is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second 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 value and momentum investors.

Outlook

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




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