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GW Pharma (GWPH) Q3 Earnings: Is a Turnaround in the Cards?

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GW Pharmaceuticals plc (GWPH - Free Report) is scheduled to report its fiscal third-quarter 2018 results on Aug 7, after market close.

GW Pharma’s share price has decreased 1.1% so far this year compared with the industry’s gain of 10.6% in the same time frame.

Factors at Play

GW Pharma derives revenues from the sale of its sole commercial drug, Sativex, which is marketed outside the United States for the treatment of spasticity due to multiple sclerosis. The company is planning to conduct a pivotal study for approval of the drug in the United States. The drug is expected to continue the growth trend of the past several quarters this time around as well.

In June, the FDA approved its lead cannabinoid pipeline candidate, Epidiolex for the treatment of Lennox-Gastaut syndrome (“LGS”) and Dravet syndrome. The candidate is under review in Europe. Although an impact on revenues is unlikely, the company is gearing up for a launch, which will likely increase operating expenses.

Moreover, two phase III studies evaluating Epidiolex in tuberous sclerosis complex and Dravet syndrome are ongoing. The company is also focused on developing several new formulations for the drug. These are likely to increase research & development expense. However, part B of a phase II/III study evaluating Epidiolex ininfantile spasms is unlikely to commence based on currently available data from part A of the study. The company may provide an update on the third-quarter earnings call.

The company is developing Epidiolex as monotherapy or in combination for treatingother indication. The company is planning to initiate a pivotal and a mid-stage studies.

Investors are expected to focus on the company’s commercialization plan for Epidiolex and update on pipeline progress in the upcoming earnings release.

Surprise History

GW Pharma’s performance over the last four quarters has been disappointing, with the company missing the Zacks Consensus Estimate in all the last four quarters. The average negative surprise over the last four quarters is 26.48%.

Earnings Whispers

Our proven model does not show conclusively that GW Pharma is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates. But that is not the case here, as you will see below.

Zacks ESP: GW Pharma has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at a loss of $2.39. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: GW Pharma sports a Zacks Rank #1, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

GW Pharmaceuticals PLC Price and EPS Surprise

 

GW Pharmaceuticals PLC Price and EPS Surprise | GW Pharmaceuticals PLC Quote

Stocks That Warrant a Look

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

BioLife Solutions (BLFS - Free Report) has an Earnings ESP of +50% and a Zacks Rank #2.  The company is scheduled to release second-quarter results on Aug 9. You can see the complete list of today’s Zacks #1 Rank stocks here.

Omeros (OMER - Free Report) has an Earnings ESP of +2.17% and a Zacks Rank #3. The company is scheduled to release second-quarter results on Aug 14.

Coherus BioSciences (CHRS - Free Report) has an Earnings ESP of +7.91% and currently carries a Zacks Rank #3. The company is scheduled to release second-quarter results on Aug 8.

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