What Awaits ACUR & Other Drug Stocks This Earnings Season?

Getting into the thick of the Q2 earnings season, we have seen releases from 208 S&P 500 members, accounting for 50.5% of the index’s total market capitalization, as of Jul 27. As per our Earnings Trend report, earnings for these companies have declined 4.7% on a year-over-year basis on 0.4% higher revenues. In spite of bleak year-over-year comparisons, a whopping 73.1% were able to surpass earnings estimates, while 51.9% beat on revenues.

Although Q2 is still on track to be the fifth quarter in a row to record negative earnings growth, the rate of growth is showing modest improvement from last quarter. Going forward, even though estimates for the third quarter are still moving south, the magnitude of the fall has lessened down.

Medical is one of the six sectors that are projected to record positive earnings growth this quarter. Earnings in the sector are expected to increase 2.3% on revenue growth of 7.7%. Within the S&P 500 index, 36.5% of the companies in the Medical sector have reported results so far, putting up an average earnings decline of 0.3% on 12.6% higher revenues and resulting in a blended beat of 78.9%. Bigwigs like Johnson & Johnson (NYSE:JNJ) , Novartis AG (NYSE:NVS) and Abbott Laboratories (NYSE:ABT) were able to beat expectations comfortably. In the biotech space, Gilead Sciences (NASDAQ:GILD) missed on revenues in spite of an earnings beat, while Biogen (NASDAQ:BIIB) topped bottom-line estimates.

Let’s see what’s in store for a few companies that are scheduled to report results early next week.

Illinois-based Acura Pharmaceuticals, Inc. (NASDAQ:ACUR) is scheduled to report second-quarter 2016 results on Aug 1. The specialty pharmaceutical company is engaged in the development and commercialization of technologies and products for addressing medication abuse and misuse. The company uses its three proprietary platform technologies – Aversion, Limitx and Impede – to develop multiple products. Acura has a dismal track record so far, having missed estimates in the past two quarters. For this quarter, the company has a Zacks Rank #3 (Hold) and an Earnings ESP of 0.00%, which makes surprise prediction difficult.

North Carolina-based Cempra, Inc. (NASDAQ:CEMP) is expected to report second-quarter earnings on Aug 1. This clinical-stage pharmaceutical company focuses on developing differentiated antibiotics for the acute care and community settings to meet critical medical needs in the treatment of bacterial infectious diseases, particularly respiratory tract infections and chronic staphylococcal infections. Its lead candidate, solithromycin, is being developed for the treatment of community acquired bacterial pneumonia (CABP). The FDA has accepted the company’s New Drug Application (NDA) on the candidate. The company has a mixed track record. The combination of Cempra’s Zacks Rank #3 and0.00% Earnings ESP makes surprise prediction difficult this quarter.

CytRx Corporation (NASDAQ:CYTR) is expected to report second-quarter results on Aug 1. The biopharmaceutical company specializes in the field of oncology. The company is currently focused on the clinical development of aldoxorubicin, a modified version of the chemotherapeutic agent, doxorubicin. The company is also evaluating the candidate as a second-line treatment for small cell lung cancer, HIV-related Kaposi's sarcoma and late-stage glioblastoma (brain cancer) among other indications. The company has an encouraging track record, having beaten estimates in three of the last four quarters. For the to-be-reported quarter, CytRx has a Zacks Rank #1 (Strong Buy) and an Earnings ESP of +15.00%, which makes us reasonably confident of an earnings beat this quarter.

Nivalis Therapeutics, Inc. (NASDAQ:NVLS) is expected to report second-quarter 2016 results on Aug 1. Nivalis, a development-stage pharmaceutical company, is focused on the discovery, development and commercialization of treatments for cystic fibrosis. Nivalis’ performance has been disappointing so far. In the four trailing quarters, the company has missed expectations thrice, and met the same once, bringing the average negative surprise to 71.27%. Nivalis currently carries a Zacks Rank #2 (Buy), which when combined with its Earnings ESP of 0.00%, makes surprise prediction difficult. (Read: Nivalis (NVLS): Can the Stock Surprise This Earnings Season?)

NIVALIS THERAPT Price and EPS Surprise