What's Ahead For ImmunoGen (IMGN) This Earnings Season?

ImmunoGen, Inc. (NASDAQ:IMGN) is scheduled to report its results for the three months ended Sep 30, 2016 on Oct 28 before the opening bell. Note that ImmunoGen is transitioning to a fiscal year ending Dec 31, effective Jan 1, 2017.

ImmunoGen’s track record has been disappointing so far, with the company consistently missing expectations in all of the past four quarters. Overall, it has posted an average negative earnings surprise of 19.54%.

Last quarter, ImmunoGen recorded a negative surprise of 24.39%. Will the company disappoint again? Let’s see how things are shaping up for this quarter.

Factors at Play

The company provided its guidance for the six-month period (Jul 1 to Dec 31) at the fourth quarter conference call held in August. During this period, ImmunoGen expects: revenues of $40 million and $45 million; operating expenses of $95 million and $100 million; and net loss of $55 million and $60 million.

Since ImmunoGen does not have any approved product in its portfolio yet, the company earns revenues in the form of royalties, license and milestone payments, and R&D support fees paid by its partners.

ImmunoGen has undertaken several restructuring initiatives, under which the company plans to cut 17% of its workforce. Meanwhile, cost savings generated under the initiative should boost earnings in the to-be-reported quarter. However, R&D expenses will continue to increase due to its investments in its lead pipeline candidate, mirvetuximab soravtansine, and accelerate the development of its two early-stage candidates – IMGN779 and IMGN632.

In the upcoming earnings call, investor focus is expected to remain on the company’s progress on its lead pipeline candidate, mirvetuximab soravtansine and other programs.

Earnings Whispers

Our proven model does not conclusively show that ImmunoGen is likely to beat estimates this quarter. That 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. 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 pegged at -5.26%.

Zacks Rank: ImmunoGen’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about a positive earnings surprise.

Note that 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.

IMMUNOGEN INC Price and EPS Surprise

IMMUNOGEN INC Price and EPS Surprise | IMMUNOGEN INC Quote

Stocks to Consider

Here are a few large-cap pharma companies that you may consider as our model shows that they have the right combination of elements to post an earnings beat this quarter

ARIAD Pharmaceuticals Inc. (NASDAQ:ARIA) is expected to release results on Nov 1. The company has an Earnings ESP of 5.26% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Infinity Pharmaceuticals, Inc. (NASDAQ:INFI) with an Earnings ESP of 5.81% and a Zacks Rank #1, will be reporting quarterly results on Nov 3.

Flamel Technologies SA (NASDAQ:FLML) has an Earnings ESP of 128.57% and it carries a Zacks Rank #2. The company is expected to report results on Nov 10.

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