Biogen Inc. (NASDAQ:BIIB) , a well-known name in the multiple sclerosis (MS) market, will report fourth-quarter 2017 results on Jan 25, before the market opens. Last quarter, the company delivered a positive earnings surprise of 10.70%.
Biogen’s shares have risen 24% this year, better than the industry’s growth of 5.8% in the same time frame.
Biogen’s earnings performance has been pretty impressive so far, having delivered a positive surprise in each of the last four quarters. The average earnings beat over the last four quarters is 8.09%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
On the third-quarter call, the company had warned that seasonality and continued competitive pressure from Roche’s (OTC:RHHBY) newly launched MS drug, Ocrevus will hurt the performance of its MS franchise in the fourth quarter.
Meanwhile, the combined number of patients using Avonex and Plegridy will continue to decline with patients transitioning to other oral MS therapies as well as due to higher discounts and allowance.
Spinraza, approved for spinal muscular atrophy in December 2016, witnessed faster-than-anticipated adoption in the United States in the first half of 2017 backed by robust underlying demand. However Spinraza U.S. sales were slow in the third quarter due to unfavorable timing of induction doses as patients transitioned from intensive Spinraza treatment to a less intensive maintenance schedule. On the third-quarter call, the company had said that due to the impact of the dosing scheduling, Spinraza sales in the fourth quarter will mainly be driven by ex-U.S. markets.
Biogen’s biosimilar products - Flixabi (a biosimilar referencing Remicade) and Benepali (a biosimilar referencing Enbrel) are also generating higher revenues. The trend should continue this quarter as well.
On the third-quarter call, the company had also said that operating expenses will be higher in the fourth quarter compared to the third with the company investing in its strategic priorities.
Investor focus on the fourth quarter call will remain on management’s comments on the impact of Ocrevus competition on Tecfidera’s sales/prescription trends, performance of Spinraza, pipeline progress and acquisition plans.
Earnings Whispers
Our proven model does not conclusively show that Biogen is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Zacks ESP: Its Earnings ESP is -0.64% as the Most Accurate estimate stands at $5.42 while the Zacks Consensus Estimate is pegged higher at $5.45. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Biogen’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings beat.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Biotech stocks that have both a positive ESP and a favorable Zacks Rank include:
Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) , scheduled to release results on Feb 8, has an Earnings ESP of +5.93% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Emergent BioSolutions Inc. (NYSE:EBS) has an Earnings ESP of +22.65% and a Zacks Rank #3. The company is expected to release results next month.
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Roche Holding (SIX:ROG) AG (RHHBY): Free Stock Analysis Report
Alexion Pharmaceuticals, Inc. (ALXN): Free Stock Analysis Report
Biogen Inc. (BIIB): Free Stock Analysis Report
Emergent Biosolutions, Inc. (EBS): Free Stock Analysis Report
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