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Is a Beat in Store for Horizon Pharma (HZNP) in Q2 Earnings?

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Horizon Pharma plc (HZNP - Free Report) is scheduled to report second-quarter 2018 results on Aug 8, before the opening bell.

Last quarter, the company missed expectations by 72.73%. Horizon Pharma’s track record has been decent so far with a four-quarter average positive earnings surprise of 54.74%. The company beat estimates thrice in the four trailing quarters.

Horizon Pharma’s shares have increased 20.4% in the year so far against the industry’s decrease of 4.9%.

Let’s see how things are shaping up for the to-be-reported quarter.

Earnings Whispers

Our proven model shows that Horizon Pharma 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).

Earnings ESP:  Horizon Pharma has an Earnings ESP of +2.56% as the Most Accurate Estimate stands at a profit of 30 cents, while the Zacks Consensus Estimate is pegged at a profit of 29 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Horizon Pharma carries a Zacks Rank #3, which when combined with a positive Earnings ESP makes us reasonably confident of an earnings beat.

Note that Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement are best avoided.

Let's see how things are shaping up for this quarter.

Factors to Consider

Horizon Pharma has been focused on expanding its orphan drug business, evident from its long-term plan, wherein the orphan drug business is expected to constitute approximately 60% of net sales in 2020. The company has been quite active on the acquisition front over the past few quarters.  Horizon Pharma acquired Hyperion in 2015 in a deal valued at about $1.1 billion and added a couple of urea cycle disorder (UCD) drugs like Ravicti and Buphenyl/Ammonaps to its portfolio.

The company has submitted a supplemental new drug application (sNDA) for Ravicti, seeking expansion of the age range to include patients from birth and older. A decision is expected in the second half of 2018.

The company is working on expanding the label of its Orphan and Rheumatology drug — Actimmune. An investigator-initiated study at the Moffitt Cancer Center is underway and enrolling patients. The study is evaluating Actimmune in combination with Roche Holdings’ (RHHBY - Free Report) Herceptin, Perjeta, and Taxol, and aims to determine the optimal dosing and treatment combination in certain advanced breast cancer patients.

The company has collaborated with the Fox Chase Cancer Center to evaluate Actimmune in combination with a Bristol-Myers Squibb Company’s Opdivo in a phase I dosing study for the treatment of kidney and bladder cancer. The study continues to enroll its fourth cohort of patients and expects to have dose level results by the end of the year. The National Cancer Institute is evaluating Actimmune in combination with Merck & Co’s Keytruda in a phase II study to treat cutaneous t-cell lymphoma patients. A dose ranging study is evaluating Actimmune in combination with Bristol-Myers’ Taxol and Roche’s Herceptin and Perjeta in a certain type of advanced breast cancer.

During the first quarter earnings call, 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.

In the second-quarter earnings call, investors’ focus will be on the performance of business units, along with that of products like Actimmune and Krystexxa, and update on teprotumumab’s development.

 

Stocks That Warrant a Look

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

Endo International Plc. (ENDP - Free Report) has an Earnings ESP of +0.72% and currently carries a Zacks Rank #3. The company is scheduled to release second-quarter results on Aug 8. You can see the complete list of today’s Zacks #1 Rank stocks here.

Madrigal Pharmaceuticals Inc. (MDGL - Free Report) is scheduled to release results on Aug 9. The company has an Earnings ESP of +13.90% and a Zacks Rank #3.

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