Ligand (LGND) Q2 Earnings: What's In Store For The Stock?

Ligand Pharmaceuticals Incorporated (NASDAQ:LGND) is scheduled to report second-quarter 2016 results on Aug 4 before the market opens. In the last reported quarter, Ligand had posted a positive earnings surprise of 67.39%. Let’s see how things are shaping up for this quarter.

Factors to Consider

Ligand generates revenues in the form of royalties, license and milestone payments and sale of Captisol material. The company’s Captisol formulation technology has allowed it to enter into several licensing deals and generate royalties.

Second quarter royalties should be driven by Promacta and Kyprolis sales as well as contribution from recently launched Evomela. Meanwhile, the Jan 2016 OMT acquisition will also drive results. The acquisition diversified Ligand's business by adding an antibody-generating platform, OmniAb, and has also created a strong platform for the company to seek new licenses and partnerships and the potential to earn royalties.

In late Jun 2016, Ligand announced that it has received $4 million related to the expansion of two OmniAb related agreements. Including these payments, Ligand expects total revenue of approximately $19 million in the second quarter of 2016. Revenues should also benefit from the May 2016 acquisition of economic rights to several programs owned by CorMatrix.

Operating expenses vary on a quarterly basis depending mainly on the timing of costs associated with internal programs and business development activities.

Surprise History

Ligand has an impressive earnings track record with the company surpassing expectations in each of the last four quarters delivering an average positive surprise of 44.33%.

Earnings Whispers?

Our proven model does not conclusively show that Ligand is likely to beat earnings 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 announce an earnings surprise. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP for Ligand is 0.00% since the Most Accurate estimate stands at 22 cents per share, in line with the Zacks Consensus Estimate.

Zacks Rank: Ligand carries a Zacks Rank #3. Ligand’s Zacks Rank #3 when combined with an ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

The Earnings ESP for Raptor Pharmaceuticals Corp. (NASDAQ:RPTP) is +11.11% and it carries a Zacks Rank #3. The company will be reporting second-quarter results on Aug 4.

Bio-Techne Corp. (NASDAQ:TECH) has an Earnings ESP of +1.14% and carries a Zacks Rank #3. It is expected to report fourth-quarter fiscal 2016 results on Aug 4.

The Earnings ESP for Acceleron Pharma, Inc. (NASDAQ:XLRN) is +7.41% and it carries a Zacks Rank #3. The company will release second-quarter results on Aug 4.