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Is a Beat in Store for Alexion (ALXN) This Earnings Season?

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Alexion Pharmaceuticals, Inc.  is scheduled to report second-quarter 2018 results on Jul 26, before the opening bell.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 13.5%. Moreoevr, Alexion’s track record is excellent as it has consistently topped estimates in the last four quarters, with an average positive earnings surprise of 15.31%.

Alexion’s shares have outperformed the industry, so far this year. The stock has gained 12.5% against the industry’s decline of 2.4%.

What Does the Zacks Model Unveil?

Our proven model shows that Alexion is likely to beat on earnings in the to-be-reported quarter because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — which suggests that the company has a significantly higher chance of beating estimates.

Earnings ESP: Alexion has an Earnings ESP of +0.62% as the Most Accurate estimate is $1.70 and the Zacks Consensus Estimate is pegged at $1.69. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Alexion’s Zacks Rank #2, when combined with a positive ESP makes us reasonably confident of an earnings beat.

Note that Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

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

Factors Likely to Impact Q2 Results

Alexion’s blockbuster drug, Soliris, continues to perform well. Alexion continues on with identying and treating a consistently high number of new patients with paroxysmal nocturnal hemoglobinuria (“PNH”) and atypical hemolytic uremic syndrome (aHUS) with Soliris,

Alexion is working on expanding Soliris’ label for additional indications. The FDA recently approved the drug for the treatment of refractory generalized myasthenia gravis (gMG) in patients who are anti-acetylcholine receptor antibody-positive. The drug was approved in Europe for this indication.

Additionally, a phase III study (PREVENT) on Soliris in patients with relapsing neuromyelitis optica spectrum disorder is ongoing and the data expected by end of 2018. Label expansion in additional indications will give Soliris access to a higher patient population and increase the commercial potential of the drug significantly.  The Zacks Consensus Estimate for Soliris hints that the drug’s sales will increase to about 8.2% from the year-ago quarter to $803 million.

Alexion recently announced that it will acquire Sweden-based Wilson Therapeutics for $855 million.. The acquisition will add a late-stage candidate, WTX101 to Alexion’s pipeline. The candidate is currently in phase III for the treatment of Wilson disease, a rare genetic disorder.

The company plans to focus on rare diseases businesses in core areas of hematology, nephrology, neurology and metabolic disorders to enhance productivity. Alexion will reduce spending and headcount associated with the previously announced de-prioritized pipeline programs as well as optimize the additional R&D expenses.

The company plans to relocate its headquarters to Boston, MA by 2018 with approximately 400 positions. As a result of the restructuring plan, the company will reduce its global workforce by approximately 20%. The company expects the increased financial flexibility will allow it to reinvest around $100 million annually into R&D. In the meantime, the company’s efforts to develop its pipeline are impressive, particularly in case of ALXN1210. Currently, it is evaluating ALXN1210 (a longer-acting anti-C5 antibody that inhibits terminal complement) in phase III studies for aHUS. The company has also made regulatory filings for ALXN 1210 for the treatment of PNH in both United States and Europe. A tentative approval for PNH is expected in 2019. The company announced positive top-line results from the phase III study of ALXN1210 which showed that patients with PNH can be effectively and safely switched from treatment with Soliris every two weeks to treatment with ALXN1210 every eight weeks. The study showed non-inferiority of ALXN1210 to Soliris in patients with PNH who had been stable on Soliris based on the primary endpoint of change in lactate dehydrogenase (LDH) levels, a direct marker of complement-mediated hemolysis in PNH. The study also demonstrated non-inferiority on all four key secondary endpoints.In a phase III trial, patients are also being dosed withALXN1210 administered intravenously every eight weeks in complement inhibitor treatment-naive adolescent and adult patients with aHUS.  The company is expected to complete enrollment in the second quarter and announce the results in the fourth quarter of 2018.

The company is likely to provide updates on its pipeline candidates in the second quarter of 2018.

 

Other Stocks That Warrant a Look

Here are some other stocks that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this quarter.

Pfizer Inc. (PFE - Free Report) is scheduled to release results on Jul 31. The company has an Earnings ESP of +0.89% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Bristol-Myers Squibb (BMY - Free Report) is scheduled to report earnings on Jul 26. The company has an Earnings ESP of +0.79% and a Zacks Rank of 3.

Gilead Sciences, Inc. (GILD - Free Report) is scheduled to report earnings on Jul 25. The company has an Earnings ESP of +0.15% and a Zacks Rank of 2.

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