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Emergent (EBS) Up on '19 View, Posts Preliminary '18 Results

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Emergent BioSolutions Inc. (EBS - Free Report) reported preliminary results for 2018 and issued a better-than-expected guidance for 2019. In fact, shares of the company were up almost 5%, following the announcement of the news on Monday.

A glimpse of the company’s price trend reveals that Emergent has outperformed the industry in a year’s time. The stock has rallied 29.8%, against the industry’s decline of 22.7%.

 

2018 Preliminary Results

Emergent expects total revenues for 2018 in the range of $779-$784 million, tightened from the previous guidance of $770-$800 million. This increase is mainly on higher product sales of raxibacumab, ACAM2000 and Narcan (naloxone HCl) nasal spray along with higher revenues from its contract manufacturing operations (CMO) services. This was, however, offset by lower BioThrax revenues.

The aforementioned guided range lies above the Zacks Consensus Estimate of $776.6 million.

Emergent raised its view of adjusted net income to $117-$121 million from the previous range of $105-$115 million.

We would like to remind investors that BioThrax is Emergent’s key Biodefense product and is the sole vaccine to be marketed for the general use of both pre-exposure prophylaxis and post-exposure prophylaxis of anthrax disease. Emergent also markets smallpox vaccine, ACAM2000, and anthrax monoclonal antibody, raxibacumab. Both were acquired in the fourth quarter of 2017 from Sanofi (SNY - Free Report) and GlaxoSmithKline (GSK - Free Report) , respectively.

2019 Outlook

Emergent’s current chief executive officer (CEO), Daniel J. Abdun-Nabi who will retire on April 1, 2019, expects that the company can generate revenues of more than $1 billion in 2019. As a result, the company expects revenues of $1.06-$1.14 billion in 2019. This guided range is in line with the Zacks Consensus Estimate of $1.05 billion for the period. Emergent expects adjusted net income in the range of $150-$180 million.

In the first quarter of 2019, the company anticipates total revenues in the band of $185-$205 million.

The 2019 outlook includes the impact of continued deliveries of BioThrax to the Strategic National Stockpile (SNS) under the current procurement contract, signed with the Centers for Disease Control and Prevention. It also includes anticipated deliveries of raxibacumab and ACAM2000 to the SNS, under the Biomedical Advanced Research and Development Authority procurement contract, and continued expansion of CDMO services.

Moreover, the 2019 outlook includes initial deliveries of Emergent’s next-generation anthrax vaccine, NuThrax for post-exposure prophylaxis of anthrax disease. Last month, the company filed an application to the FDA for the emergency use authorization of NuThrax, following a public health emergency involving Bacillus anthracis. A decision by the agency is expected in the first half of 2019.

The outlook also includes the impact of sales from Narcan nasal spray and two vaccines namely Vaxchora and Vivotif.  The Narcan nasal spray was added to Emergent’s portfolio following the acquisition of Adapt Pharma in October 2018. During the same time, Emergent acquired specialty vaccine company, PaxVax, which added the latter’s two FDA-approved vaccines — Vaxchora (Cholera Vaccine) and Vivotif (Typhoid Vaccine).

Zacks Rank & Key Pick

Emergent currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the healthcare sector is Vanda Pharmaceuticals Inc. (VNDA - Free Report) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Vanda’s earnings estimates have moved 11.1% north for 2019 over the past 90 days. The stock has skyrocketed 101.4% in a year.

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