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Ophthotech (OPHT) Down 21.7% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Ophthotech (OPHT - Free Report) . Shares have lost about 21.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Ophthotech due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Ophthotech Q3 Earnings Beat, Gene Therapy in Focus

Ophthotech incurred a loss of 41 cents per share for the third quarter of 2018, narrower than the Zacks Consensus Estimate of a loss of 43 cents. The company had recorded net income of $5.25 per share in the year-ago quarter.

With no approved products in its portfolio, Ophthotech derives revenues from milestone and other payments under collaborations. However, there were no such revenues in the quarter. The company had reported $206.7 million in revenues in the year-ago period. The company had earned collaboration revenues under the licensing and commercialization agreement with Novartis that ended in October 2017, following the failure of Fovista development program.

Quarter in Detail

Research and development expenses in the third quarter decreased 12.1% to $9.4 million, mainly due to termination of the Fovista development programs in wet age-related macular degeneration (“AMD”) and lower personnel costs

General and administrative expenses decreased 15.5% from the year-ago period to $6 million due to lower personnel, operational and infrastructure cost.

Cash Balance

Ophthotech’s cash balance was $135.2 million as of Sep 30, 2018 compared with $146 million as of Jun 30, 2018.

The company increased its expectation for cash balance at 2018 end to be in the range of $125 million to $130 million (previously $112 million to $117 million), taking into account the impact of Inception acquisition along with gene therapy pipeline expansion and continuation of Zimura development.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -8.82% due to these changes.

VGM Scores

At this time, Ophthotech has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

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

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Ophthotech has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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