Back to top

Will ACADIA (ACAD) Disappoint Investors in Q2 Earnings?

Read MoreHide Full Article

ACADIA Pharmaceuticals Inc. (ACAD - Free Report) is scheduled to report second-quarter 2018 results on Aug 8 after the market closes.

The company’s track record has been positive so far as its key metrics have surpassed estimates in all the last four quarters with an average beat of 16.25%. Last reported quarter, ACADIA beat on earnings with a positive surprise of 21.43%.

However, shares of ACADIA have tumbled 50.8% year to date, significantly wider than the industry’s decline of 5.3%.

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

Factors at Play

ACADIA is focused on developing products for treating unmet medical needs in central nervous system (CNS). The performance of its first approved drug, Nuplazid (pimavanserin), for treating hallucinations and delusions associated with Parkinson’s disease (PD) psychosis, has been impressive since its launch in April 2016. We expect this positive trend to continue in the soon-to-be reported quarter.

Nuplazid net sales for the second quarter of 2018 are likely to be in the range of $57-$61 million. The company predicts strong volume growth for Nuplazid in the coming quarters.

In June, the FDA approved a new capsule dose formulation and a new tablet strength of Nuplazid. This nod is projected to address a new patient population and drive sales for the drug. However, it will make no contribution to Nuplazid’s sales in the second quarter.

Moreover, the company is also studying the drug for other CNS indications, namely dementia-related psychosis, schizophrenia inadequate response, schizophrenia negative symptoms and a major depressive disorder (MDD). ACADIA is anticipated to provide top-line results from a phase II study on MDD during the second half of the year.

We expect management to provide an update in detail on the progress of Nuplazid and its continuous label expansion on second-quarter earnings call.

ACADIA expects to end 2018 with more than $200 million of cash, cash equivalents and investment securities on its balance sheet.

What Our Model Indicates

Our proven model does not conclusively show that ACADIA will beat on earnings this earnings season. This is because a stock needs to have both — a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. However, that is not the case here as you will see below.

Earnings ESP: ACADIA has an Earnings ESP of -7.30%, which decreases the odds of an earnings surprise. This is because the Most Accurate Estimate stands at a loss of 49 cents while the Zacks Consensus Estimate is pegged at a loss of 46 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: ACADIA currently carries a Zacks Rank #4 (Sell), which lowers the predictive power of ESP. Therefore, 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 some biotech stocks that you may want to consider as per our model, these have the right combination of elements to beat on earnings beat this reporting cycle.

Pacira Pharmaceuticals, Inc. (PCRX - Free Report) has an Earnings ESP of +42.86% and a Zacks Rank #2. The company is scheduled to release second-quarter results on Aug 2 before the market opens. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dicerna Pharmaceuticals, Inc. (DRNA - Free Report) is expected to release second-quarter results on Aug 9. The company has an Earnings ESP of +30.95% and a Zacks Rank #3.

Aduro Biotech, Inc. (ADRO - Free Report) has an Earnings ESP of +4.55% and a Zacks Rank of 3. The company is expected to release second-quarter results on Aug 1.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>



More from Zacks Analyst Blog

You May Like