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Horizon Pharma (HZNP) Down 1.9% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Horizon Pharma (HZNP - Free Report) . Shares have lost about 1.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Horizon Pharma due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers. <p><u><strong>Horizon Pharma Q2 Earnings &amp; Sales Beat, Shares Rise</strong></u></p><p style="text-align: justify;">Horizon<strong>&nbsp; </strong>reported better-than-expected results for the second quarter of 2018.&nbsp; Following the news, the company&rsquo;s shares went up 10.7%.</p><p style="text-align: justify;">The company reported second-quarter adjusted earnings of 48 cents per share, which beat the Zacks Consensus Estimate of 29 cents and was higher than 41 cents reported in the year-ago quarter.</p><p style="text-align: justify;">Sales in the second quarter were up 4.6% year over year to $302.8 million and beat the Zacks Consensus Estimate of $278 million.</p><p style="text-align: justify;"><strong>Quarter in Detail</strong></p><p style="text-align: justify;">The company realigned its structure to operate its strategic growth business, orphan and rheumatology, separately from its primary care business. Thus with effect from the second-quarter of 2018, the company is reporting its financial results as two separate segments: the orphan and rheumatology, and the primary care. Horizon Pharma expects the new structure to help it in better allocation of resources in developing products for unmet treatment needs of patients with rare diseases.</p><p style="text-align: justify;">Sales of the orphan and rheumatology segment were $201.7 million, up 17.2% from the prior year&rsquo;s quarter, driven by continued strong Krystexxa growth as well as growth of Ravicti and Procysbi. Krystexxa sales increased 53% year over year to $58.6 million. The company is making significant investments in the commercial expansion of Krystexxa, which is expected to continue to drive future net sales growth and margin expansion over time</p><p style="text-align: justify;">Second-quarter 2018 net sales of the primary care segment were $101.1 million, down 14% year over year.</p><p style="text-align: justify;">Adjusted research and development (R&amp;D) expenses were 6.7% of net sales and adjusted SG&amp;A expenses were 45% of net sales.</p><p style="text-align: justify;"><strong>2018 Guidance</strong></p><p style="text-align: justify;">Horizon Pharma continues to expect sales in the range of $1.17-$1.2 billion.</p><p style="text-align: justify;">The company expects Krystexxa sales to increase 65% year over year in 2018.<br /><br /><br /><br />&nbsp;</p><p style="text-align: justify;"><strong>Other Updates</strong></p><p style="text-align: justify;">The company&rsquo;s pipeline candidate,&nbsp;teprotumumab, which is being developed for the treatment of thyroid eye disease (TED), completed its target enrolment significantly ahead of schedule in the phase III OPTIC study.</p><p style="text-align: justify;">The company plans to initiate a new study on Krystexxa to continue exploring a broader clinical profile of this medicine, the only FDA-approved treatment for uncontrolled gout. Enrollment is expected to begin in the fourth quarter of 2018.</p>

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

Currently, Horizon Pharma has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Horizon Pharma has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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