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Clovis (CLVS) Up 122.5% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Clovis Oncology (CLVS - Free Report) . Shares have added about 122.5% in that time frame, outperforming the S&P 500.

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

Clovis Q3 Earnings & Sales Beat Estimates

Clovis incurred adjusted loss of $1.89 per share in the third quarter of 2019, narrower than the Zacks Consensus Estimate of a loss of $1.92 but wider than the year-ago loss of $1.71 per share. Adjusted loss excludes expense related to acquired in-process research and development, and a gain on extinguishment of debt. Including these items, the company incurred a loss of $1.72 in the quarter.

Net revenues, entirely from Rubraca, were up almost 65% year over year to $37.6 million in the quarter, beating the Zacks Consensus Estimate of $36.31 million. Sales were up 14% sequentially. The company had recorded total revenues of $22.8 million, entirely from Rubraca sales in the United States, in the year-ago quarter.

Quarter in Details

Rubraca sales in the United States were up 12% sequentially to $36.5 million during the quarter. Ex-U.S. market sales were $1.1 million in the third quarter compared with $0.3 million in the second quarter of 2019. The growth was driven by progress in new patient starts and higher duration of use.

In October, the company launched the drug in England with reimbursement provided through the Cancer Drugs Fund.

In the third quarter, research & development expenses increased 21.9% year over year to $77.9 million, primarily due to increased expenses for clinical studies on Rubraca. Selling, general and administrative (SG&A) expenses declined 1.6% year over year to $41.8 million, reflecting the impact of cost-savings initiatives.

The company expects R&D expenses to decline in 2020 as the largest of the Clovis-sponsored clinical trials near completion and spending related to clinical programs reduce.

Cash used in operating activities in the quarter was $57 million, lower than $72.5 million in the year-ago quarter. The decline was expected as Clovis guided lower cash utilization for operating activities in the second half of 2019 on its second-quarter earnings call.

Clovis ended the quarter with $354.1 million of cash equivalents and available-for-sale securities compared with $315.9 million as of Jun 30, 2018.

The company expects its cash resources to be enough to support its operations into the second half of 2021.

2019 Guidance

Clovis raised the lower end of its full-year guidance for product revenues. The company expects Rubraca to generate sales in the range of $141 million to $147 million, compared to the previously provided range of $137 million to $147 million.

How Have Estimates Been Moving Since Then?

Estimates review followed an upward path over the past two months. The consensus estimate has shifted 20.4% due to these changes.

VGM Scores

At this time, Clovis has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% 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

Clovis has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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