Geron (GERN) Q3 Earnings: Will The Store Pull A Surprise?

Geron Corporation (NASDAQ:GERN) is scheduled to report third-quarter 2016 results on Nov 3 after the market closes.

In the last reported quarter, the company recorded a positive surprise of 28.57%. Let’s see how things are shaping up for the upcoming announcement.

Imetelstat Remains in Focus

With no approved product in its portfolio, Geron’s top line solely comprises license fees and royalties. In such a scenario, investor focus will remain on the company’s pipeline. Geron currently has one candidate in its pipeline, imetelstat, which is being developed in collaboration with Johnson & Johnson’s (NYSE:JNJ) Janssen Biotech.

The company’s shares took a hit this September when the company announced unfavorable findings from planned internal reviews of initial data from the two studies – IMbark (phase II) for the treatment of myelofibrosis, and IMerge (phase II/III) for the treatment of myelodysplastic syndromes.

Findings concluded that clinical activity of imetelstat in the 4.7 mg/kg dosing arm in the IMbark study did not warrant any further investigation and it will be closed to new patient enrollment. The company, however, is still evaluating imetelstat in the 9.4 mg/kg dosing arm, which was on hold. In the upcoming conference call, we expect the company to shed more light on the candidate.

In addition to updates on imetelstat, investors will also be interested to know if Geron has made any progress in expanding its pipeline. The company is seeking to add new oncology candidates, programs or companies to its portfolio with focus on the hematology-oncology space.

Like all development-stage companies, Geron too will to see a rise in research and development expenses.

Surprise History

Geron’s performance over the last four quarters has been mixed, with the company surpassing expectations twice and meeting the same twice. The average positive surprise over the last four quarters is 20.78%.

What Our Model Indicates

Our proven model does not conclusively show that Geron is likely to beat estimates 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) to be able to beat estimates. But that is not the case here, as you will see below.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate Estimate and the current Zacks Consensus Estimate stand at a loss of 6 cents. Please check our Earnings ESP Filter that enables you find stocks that are expected to come out with earnings surprises.

Zacks Rank: Although Geron’s Zacks Rank #1 increases the predictive power of ESP, its 0.00% ESP makes surprise prediction difficult this quarter.

Note that we caution against stocks with Zacks Ranks #4 or #5 (Sell-rated stocks) going into an earnings announcement, especially when the company is seeing a negative estimate revision momentum.

Stocks to Consider

Here are some health care stocks that you may want to consider, as our model shows that they too have the right combination of elements to post an earnings beat this quarter.

Infinity Pharmaceuticals, Inc. (NASDAQ:INFI) is scheduled to release third-quarter results on Nov 3 after market closes. The company has an Earnings ESP of is +5.81% and it sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for Zoetis Inc. (NYSE:ZTS) is +2.17% and it carries a Zacks Rank #3. The company is slated to release third-quarter results on Nov 2.

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