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PDL BioPharma (PDLI) to Post Q1 Earnings: What's in Store?

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Investor focus will be on PDL BioPharma, Inc.’s (PDLI - Free Report) ability to acquire new income-generating assets for a recurrent revenue uptick, when the company reports first-quarter 2019 earnings in the days ahead.

The company’s surprise track record has been impressive so far, having delivered an earnings beat in each of the trailing four quarters, the average being 38.39%. In the last reported quarter, PDL BioPharma came up with a positive surprise of 25.00%.

Shares of PDL BioPharma have gained10.3% so far this year, outperforming the industry’s increase of 4%.

Let’s see, how things are shaping up for this announcement.

Factors to Consider

PDL BioPharma has a majority ownership in Noden Pharma and receive revenues from the sales of Noden products — Tekturna and Tekturna HCT — in the United States. Notably, Noden Pharma closed an asset purchase agreement with Novartis (NVS - Free Report) whereby it acquired exclusive global rights to manufacture, market and sell Tekturna.

The company also has royalty agreements with several companies, whereby it enjoys royalty rights on product sales. PDL BioPharma receives royalties from the sales of approved products of these companies. It also earns royalty revenues from the Queen et al. licenses. These royalty revenues and sales from its Noden products — Tekturna and Tekturna HCT — mainly constitute the company’s top line. The product sales, however, have been on a declining trend, which might persist in the to-be-reported quarter as well.

Moreover, in March 2019, the authorized generic version of Tekturna (150 mg/300 mg tablets) was launched in the United States by the privately held company, Prasco LLC. This introduction does not include an authorized generic version of Tekturna HCT. The generic launch could affect the company’s product sales in the first quarter.

We expect management to provide an update on the same during the upcoming investors’ call.

Earnings Whispers

The proven Zacks model does not conclusively show that PDLBioPharma is likely to beat estimates this earnings season. This is because a stock needs to have both a positive Earnings ESP and a top Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Earnings ESP: PDL BioPharma has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate stand at 8 cents each. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: PDL BioPharma currently sports a Zacks Rank of 1, which increases the predictive power of ESP. However, the company’s 0.00% ESP in the combination makes surprise prediction difficult for the stock this reporting cycle.

We caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

PDL BioPharma, Inc. Price and EPS Surprise

Stocks That Warrant a Look

Here are a few health care stocks worth considering as our model shows that these have the right mix of elements to beat on earnings this time around.

Aduro Biotech, Inc. has a Zacks Rank #2 and an Earnings ESP of +82.00%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Horizon Pharma Public Limited Company has a Zacks Rank #3 and an Earnings ESP of +25.00%.

Zacks' Top 10 Stocks for 2019

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