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

ImmunoGen, Inc. (NASDAQ:IMGN) is scheduled to report first-quarter 2018 results on May 4 before the market opens. In the last reported quarter, the company delivered a negative earnings surprise of 42.86%.

ImmunoGen’s earnings performance has been a mixed bag in the recent past. The company surpassed expectations in two of the last four quarters, missing the same in the other two. Overall, ImmunoGen pulled off an average negative surprise of 0.50%.

Shares of ImmunoGen have significantly outperformed the industry so far this year. The stock has skyrocketed 71.1% against the industry’s decrease of 2.1%.

Let’s see, how things are shaping up for this quarter.

Factors at Play

In absence of an approved product in ImmunoGen’s portfolio, investors’ focus should remain on the company’s progress with its lead pipeline candidate, mirvetuximab soravtansine, and other programs.

ImmunoGen has significantly advanced with respect to mirvetuximab soravtansine. Recently, the company successfully completed the interim analysis of a phase III study (FORWARD I), evaluating the candidate as a single-agent therapy for treating patients with platinum-resistant ovarian cancer, whose tumors express high or medium levels of FR alpha. The company has also finished full enrollment of the trial two months ahead of schedule and expects top-line results from the program during the first half of 2019.

Also, combination regimens with mirvetuximab soravtansine to address ovarian cancer are in phase Ib/II FORWARD II study. The trial consists of cohorts assessing mirvetuximab soravtansine in combination with Roche’s (OTC:RHHBY) Avastin and Merck’s Keytruda. Initial findings from the study demonstrated that the candidate has potential to complement all available therapies for the indication. Updated outcomes from the program are expected in the first half of 2018.

Apart from mirvetuximab soravtansine, ImmunoGen is working to develop a couple of early-stage candidates including IMGN779 and IMGN632. Last December, the company presented positive results from the ongoing phase I study, evaluating IMGN779 on patients with relapsed or refractory adult acute myeloid leukemia (AML) at the annual meeting of American Society of Hematology. Moreover, this January, the company moved IMGN632 into phase I study to treat hematological malignancies including AML.

Per fourth-quarter 2017 earnings call, the company issued its cash guidance for 2018, anticipating cash and cash equivalents in the range of $115-$120 million by the end of December 2018. ImmunoGen had then stated that it hoards enough funds to run its operations through the fourth quarter of 2019.

What the Model Indicates

Our proven model does not conclusively show that ImmunoGen is likely to beat estimates this reporting cycle. This is because a stock needs to have both a positive Earnings ESP and a solid 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: ImmunoGen has an Earnings ESP of -3.07%, representing the percentage difference between the Most Accurate estimate of a loss of 28 cents and the Zacks Consensus Estimate of a loss of 27 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: ImmunoGen has a Zacks Rank #3, which increases the predictive power of ESP. However, the company needs a positive ESP to be confident about an earnings surprise. Hence, this combination leaves surprise prediction inconclusive.

We caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Two health care stocks with the right combination of elements to beat estimates this time around are as follows:

Gilead Sciences, Inc. (NASDAQ:GILD) is scheduled to report first-quarter financial numbers on May 1. The company has an Earnings ESP of +0.32% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Celgene Corporation (NASDAQ:CELG) is scheduled to release first-quarter results on May 4. The company has an Earnings ESP of +0.63% and a Zacks Rank of 3.

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