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Alkermes (ALKS) Up 3% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Alkermes (ALKS - Free Report) . Shares have added about 3% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Alkermes due for a pullback? 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 catalysts.

Alkermes Earnings and Sales Beat Estimates in Q3

Alkermes reported adjusted loss of 4 cents per share in the third quarter of 2019 in contrast to earnings of 7 cents in the year-ago quarter. However, the reported loss was narrower than the Zacks Consensus Estimate of a loss of 21 cents.

The company’s revenues of $255.2 million in the quarter increased 2.6% from the year-ago quarter. The top line beat the Zacks Consensus Estimate of $250.98 million. The company’s proprietary products, especially Aristada, drove revenues. However, this was offset by declining sales of Ampyra, following the entry of generics into the market in 2018.

Factors Impacting Q3

Manufacturing and royalty revenues from Risperdal Consta, InvegaSustenna/Xeplion and InvegaTrinza/Trevicta were $76.7 million, down 0.6% year over year. The same from Ampyra/Fampyra were down 62.1% year over year to $7.7 million due to generic competition. Research and development revenues, primarily from the collaboration with Biogen for Vumerity (diroximel fumarate) were $12.7 million, down 22.1% year over year.

Vivitrol sales improved about 6.6% year over year to $85.2 million.

Aristada sales came in at $53.6 million, up 48.5% year over year.

Research and development (R&D) expenses were $107.7 million, down 6.3% year over year.

Selling, general and administrative (SG&A) expenses were $148.7 million, up 15.5% year over year.

2019 Guidance

Alkermes maintained its total revenue guidance for 2019 in the range of $1.14-$1.19 billion. The expected range includes milestone payment of $150 million, which will be triggered following final FDA approval for multiple sclerosis (“MS”) candidate, Vumerity. The Zacks Consensus Estimate for 2019 revenues is $1.18 billion.

The company now expects Aristada net sales for 2019 to be $185-$190 million, down from its previous expectation of $200-$210 million.

The company narrowed its guidance for Vivitrol sales to the range of $330-$340 million from its previous range of $330-$350 million. It anticipates R&D expenses to be $430-$450 million compared with the previous range of $450-$480 million. Alkermes’ guidance for SG&A expenses stands at $590-$610 million (previously $590-$620 million).

The company raised its profit guidance. It expects earnings per share to be 44-57 cents, compared with 25-43 cents expected previously. The Zacks Consensus Estimate for 2019 earnings is pegged at 36 cents.

Pipeline Update

The company stated that the FDA has tentatively approved Vumerity for treating relapsing form of MS. However, the final approval is pending and is expected by the end of 2019. Meanwhile, it intends to submit a new drug application for ALKS 3831 in both schizophrenia and bipolar I disorder and the first efficacy data for early-stage immuno-oncology candidate – ALKS 4230 before year-end.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

Currently, Alkermes has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 C. 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, Alkermes has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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