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Why is Keryx (KERX) Down 2.7% Since its Last Earnings Report?

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It has been about a month since the last earnings report for Keryx Biopharmaceuticals, Inc. (KERX - Free Report) . Shares have lost about 2.7% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is KERX due for a breakout? 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.

Keryx Loss Narrower than Expected in Q1, Sales Beat

Keryx reported a loss of 18 cents per share in the first quarter of 2018, narrower than Zacks Consensus Estimate of a loss of 19 cents. The loss was also narrower than the year-ago loss of 21 cents.

Revenues came in at $21.8 million in the quarter, beating the Zacks Consensus Estimate of $21.7 million and surpassed the prior-year figure of $11.8 million.

Auryxia net product sales in the United States came in at $20.6 million, up 96% from $10.5 million in the prior-year quarter. Sales in the quarter were driven by increase in Auryxia prescription trends due to higher demand. Auryxia’s prescription increased to 34,600 in the quarter, which represents 6.9 million Auryxia tablets, compared with about 15,800 prescriptions and 3.4 million Auryxia tablets in the first quarter of 2017.

The company launched Auryxia for the treatment of IDA in adults living with chronic kidney disease, not on dialysis, late in the fourth quarter of 2017.

License revenues came in at $1.1 million, down 15.4% year over year. Keryx earns license revenues from royalties on net sales of Riona (Japan's trade name for Auryxia) from its Japanese partners.

Research and development expenses increased to $8.4 million in the quarter from $6.8 million in the year-ago quarter, primarily owing to higher non-cash stock compensation expense in the quarter.

Selling, general and administrative expenses were $25.8 million, up 11.7%.

The company exchanged its $125 million convertible senior notes due 2020 issued in 2015 and raised an additional $10 million in a private transaction with funds managed by The Baupost Group L.L.C.  As part of the exchange, the company issued new $164.746 million convertible senior notes due 2021. The new notes allow the company to pursue an asset-based revolving line of credit facility, for up to $40 million, as a non-dilutive financing source that could leverage the company’s growing asset base.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter compared to one lower.

VGM Scores

At this time, KERX has an average Growth Score of C, however its Momentum is doing a lot better with an A. The stock was allocated a grade of F on the value side, putting it in the bottom 20% 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.

Our style scores indicate that the stock is more suitable for momentum investors than growth investors.

Outlook

Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. Interestingly, KERX has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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