What's In The Cards For AcelRx (ACRX) This Earnings Season?

AcelRx Pharmaceuticals, Inc. (NASDAQ:ACRX) is scheduled to release first-quarter 2019 results on May 8.

Shares of the company have increased 56.7% year to date compared with the industry’s growth of 10.1%.

In the last reported quarter, the company had a positive earnings surprise of 10.00%. Moreover, AcelRx has surpassed earnings estimates in two of the trailing four quarters, the average positive surprise being 0.98%.

Let’s see how things are shaping up prior to the announcement of the upcoming results.

Factors Likely to Impact Q1 Results

AcelRx is a specialty pharmaceutical company focused on innovative therapies for use in medically supervised settings. The company received its first FDA approval for DSUVIA in November 2018 for use in adults in certified medically supervised healthcare settings, for the management of acute pain severe enough to require an opioid analgesic, and for which alternative treatments are inadequate.

The drug was launched in January 2019. We expect the company to provide updates on the launch of the drug along with revenues it generated in the first quarter of 2019.

The company incurred increased research and development (R&D) and general and administrative (G&A) expenses due to increased personnel-related expenses in preparation for the commercial launch of DSUVIA. Quarterly combined R&D and SG&A expense in 2019 is expected to range from $15 million to $18 million, depending on the quarter, which includes approximately $2 million of non-cash stock-based compensation per quarter.

The packaging of DSUVIA, the most costly component of production, is currently semi-automated, a process which the company expects to continue to be used for another 12- to 15 months. While this provides sufficient capacity to meet the company’sishort-term needs, the company expects to transfer packaging of DSUVIA to a new fully automated line later in 2019 with qualified commercial products available by mid-2020.

The company in the final stages of selecting a contract manufacturer to house and operate the new automated line, which is an annual single ship capacity of 10 million units allowing flexibility to increase production as required. We expect the company to provide updates on this in the first-quarter conference call. Annual capital expenditures are expected to range from $5-$7 million attributed mainly to the installation of a new high-volume, automated packaging line at the company’s contract manufacturer.

What Does the Zacks Model Unveil?

Our proven model does not conclusively show an earnings beat for AcelRx in the to-be-reported 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.

Earnings ESP: AcelRX has an Earnings ESP of -3.23%. This is because the Most Accurate Estimate stands at a loss of 24 cents and the Zacks Consensus Estimate is pegged at a loss of 23 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently has a Zacks Rank #3, which increases the predictive power of ESP. However, we need to have a positive Earnings ESP to be confident of an earnings beat.

Note that Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement are best avoided.

Stocks That Warrant a Look

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

Horizon Pharma plc (NASDAQ:HZNP) is scheduled to report first-quarter 2019 results on May 8. The company has an Earnings ESP of +25.00% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Inovio Pharmaceuticals, Inc. (NASDAQ:INO) is scheduled to report first-quarter 2019 results on May 9. The company has an Earnings ESP of +13.79% and a Zacks Rank of 3.

Genmab A/S GNMSF is scheduled to report first-quarter 2019 results on May 8. The company has an Earnings ESP of +80.95% and a Zacks Rank of 1.

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