A month has gone by since the last earnings report for Emergent Biosolutions (EBS - Free Report) . Shares have lost about 4.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Emergent Biosolutions 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.
Emergent Earnings Beat in Q3, Vaccines Drive Sales
Emergent BioSolutions reported third-quarter 2019 earnings of $1.21 cents per share, comprehensively beating the Zacks Consensus Estimate of 63 cents and also the year-ago quarter’s 55 cents.
Revenues in the reported quarter soared 80% from the prior-year period to $311.8 million, primarily backed by high product sales owing to the company’s recent acquisitions and better contracts plus grants revenues. The top line substantially beat the Zacks Consensus Estimate of $281 million.
Quarter in Detail
Total product sales surged 92% to $256.2 million from the year-earlier quarter. This uptick was mainly on the back of contribution from Narcan nasal spray, acquired from Adapt Pharma and higher sales of small pox vaccine ACAM2000. Newly acquired product Narcan (naloxone HCl) nasal spray added $75 million to product sales.
ACAM2000, which was acquired from Sanofi added $112.1 million to product sales in the reported quarter, reflecting a significant increase year over year.
However, anthrax vaccines (BioThrax and AV7909) sales declined 12% to $40.3 million in the reported quarter. Other product sales also plunged 41% on a year-over-year basis to $28.8 million.
Revenues from contracts and grants skyrocketed 95.6% year over year to $35.6 million, primarily owing to greater R&D activities associated with certain development funding programs, most notably, the anthrax vaccine AV7909.
Contract manufacturing revenues decreased 10% to $20 million from the year-ago figure. This downside was primarily due to the contracted service work that took place in third-quarter 2018 but did not recur in the same period this year.
The company recorded adjusted EBITDA of $106.4 million in the reported quarter compared with $39.1 million in 2018, reflecting an increase of 172.1%.
Emergent retained its previously issued guidance for earnings and sales. It expects revenues in the range of $1.06-$1.14 billion for 2019.
The company anticipates adjusted net income in the band of $150-$180 million and adjusted EBITDA in the bracket of $280-$310 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -18.02% due to these changes.
At this time, Emergent Biosolutions has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 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.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Emergent Biosolutions has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.