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Why Is Bluebird (BLUE) Down 15.1% Since Last Earnings Report?

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It has been about a month since the last earnings report for Bluebird Bio (BLUE - Free Report) . Shares have lost about 15.1% in that time frame, underperforming the S&P 500.

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

bluebird’s Loss Wider-Than-Expected, Revenues Down Y/Y

The company reported a loss of $2.99 per share in the first quarter of 2019, wider than the Zacks Consensus Estimate of a loss of $2.80 and the year-ago quarter’s loss of $2.31. The wider-than-expected year-over-year loss was due to higher research & development (R&D), and general & administrative (G&A) expenses on lower revenues.

Revenues of $12.5 million beat the Zacks Consensus Estimate by 2.58%.

Revenues were down from $16 million in the year-ago quarter.

Quarter in Detail

R&D expenses escalated to $122.6 million in the first quarter of 2019 from $97.1 million a year ago, driven by costs incurred by the company to advance and expand the pipeline, resulting in increased clinical trial-related costs and manufacturing costs for development programs, higher laboratory expenses, elevated employee-related costs due to headcount growth, and escalated facility-related costs.

G&A expenses of $60.3 million were up 72.5% from the year-ago quarter, owing to overall growth of pipeline and commercial-readiness activities.

Pipeline Development

bluebird’s pipeline progress has been impressive in the first quarter. The pipeline includes candidates for severe genetic diseases. The company’s portfolio consists of candidates like LentiGlobin for the treatment of transfusion-dependent β-thalassemia (TDT) and severe sickle cell disease (SCD), and Lenti-D for the treatment of cerebral adrenoleukodystrophy (CALD).

In March 2019, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) adopted a positive opinion recommending conditional marketing authorization for Zynteglo (autologous CD34+ cells encoding β A-T87Q-globin gene), a gene therapy for patients aged 12 years or older with TDT. The CHMP’s positive opinion will now be reviewed by the European Commission (EC).

In April 2019, bluebird bio treated the first patient in ALD-104, the company’s international, non-randomized, open-label, multi-site phase III study of Lenti-D product after myeloablative conditioning, using busulfan and fludarabine, in patients younger than or equal to 17 years of age with CALD.

The oncology pipeline includes CAR T cell product candidates — idecabtagenevicleucel  (formerly known as bb2121) and bb21217 — for the treatment of multiple myeloma. The company is co-developing and co-promoting bb2121 in the United States with Celgene Corp
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, Bluebird has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, 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 these revisions indicates a downward shift. Notably, Bluebird has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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