Pacific Biosciences (PACB) Q2 Earnings: What's In Store?

Pacific Biosciences of California Inc. (NASDAQ:PACB) is scheduled to report second-quarter 2016 results on Aug 4. Last quarter, the company reported a loss of 23 cents per share, a penny narrower than the Zacks Consensus Estimate.

Notably, Pacific Biosciences' results compared unfavorably with the Zacks Consensus Estimate in the last four quarters, with an average miss of 2.53%.

Let us see how things are shaping up for this announcement.

Factors Influencing This Quarter

Pacific Biosciences expects second-quarter 2016 revenues to be lower on a year-over-year basis due to a decline in contractual revenues. The company received $10 million in contractual revenues from Roche in the year-ago quarter as milestone payments.

Lower Sequel system shipments in the first half of 2016 due to the limited availability of SMRT cells are also expected to hurt results.

Nevertheless, increasing demand for the new Sequel system and a growing customer base bodes well for top-line growth. On the other hand, persistent losses and cash burn may prove to be headwinds in the near term.

Earnings Whispers

Our proven model does not conclusively show that Pacific Biosciences is likely to beat the Zacks Consensus Estimate 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: The Earnings ESP for Pacific Biosciences is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 22 cents.

Zacks Rank: Pacific Biosciences carries a Zacks Rank #3, which increases the predictive power of ESP; but when combined with a 0.00% ESP, it makes surprise prediction difficult.

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

Stocks That Warrant a Look

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

GlycoMimetics Inc. (NASDAQ:GLYC) with an Earnings ESP of +13.64% and Zacks Rank #1.

Zoetis Inc. (NYSE:ZTS) with an Earnings ESP of +2.27% and Zacks Rank #1.

ANI Pharmaceuticals Inc. (NASDAQ:ANIP) with an Earnings ESP of +2.63% and a Zacks Rank #1.