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Why Is Incyte (INCY) Down 1.7% Since Last Earnings Report?

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It has been about a month since the last earnings report for Incyte (INCY - Free Report) . Shares have lost about 1.7% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Incyte 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.

Incyte Q1 Earnings & Revenues Beat Estimates, Up Y/Y

Incyte reportedearnings of 62 cents per share, which beat the Zacks Consensus Estimate of 40 cents. Incyte reported a loss of 7 cents in the year-ago quarter.

Including milestones and contracts, revenues came in at $497.8 million, which increased 30% year over year and beat the Zacks Consensus Estimate of $475.6 million.

Quarter in Detail

Total product-related revenues came in at $457.8 million, up 20% from the year-ago quarter. Of these, Jakafi revenues came in at $375.6 million, up 20% from the year-ago quarter. However, Jakafi revenues missed the Zacks Consensus Estimate of $379 million. Net product revenues of Iclusig amounted to $20.6 million, down from $20.8 million in the year-ago quarter.  

Product royalty revenues from Novartis or the commercialization of Jakafi in ex-U.S. markets grew 10% to $45.6 million. Olumiant’s product royalty revenues came in at $16 million.

R&D expenses were $243 million, down from $279 million in the year-ago quarter. SG&A expenses amounted to $124 million, up from $121 million in the prior-year quarter.

2019 Outlook Updated

The company expects Jakafi revenues of $1,580-$1,650 million (same as before). Iclusig revenues are expected to be $90-$100 million. R&D expenses are expected to be $1,020-$1,070 million compared with the earlier estimate of $1060-$1,130 million. SG&A expenses are anticipated to be $420-$470 million.

Pipeline Update

Pipeline progress in the first quarter was impressive. The global phase III GRAVITAS-301 trial on itacitinib for the treatment of patients with steroid-naïve acute GVHD has completed enrollment. Results from the study are expected later in the year.

Incyte expects to submit the NDA for pemigatinib as a second-line treatment for patients with FGFR2 translocated cholangiocarcinoma in the second half of 2019. The company plans to initiate a phase III trial for the first-line treatment of patients with cholangiocarcinoma in the coming months.

The primary endpoint was met in the phase II trial of ruxolitinib cream in patients with vitiligo.

Incyte has elected to no longer co-fund the development of baricitiniband in order to reallocate the capital to develop its pipeline. However, Incyte will continue to receive royalties on global net sales of Olumiant (baricitinib), per the terms of its agreement with partner Eli Lilly.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 44.68% due to these changes.

VGM Scores

At this time, Incyte has a strong Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Incyte has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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