Biogen Idec, Inc.
) to report lower-than-expected earnings when it releases its
first-quarter 2013 results before the opening bell on Apr 25. We
note that Biogen had missed earnings estimate in the previous
quarter too, with a negative earnings surprise of 4.11%.
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Factors to Consider this Quarter
Biogen's fourth quarter 2012 results were hurt by higher
expenses. Moreover, results were adversely affected by a
correction in the accounting for taxes on capitalized interest at
Biogen's Denmark facility. The correction increased fourth
quarter 2012 tax expense by $29 million and reduced earnings by
We expect operating expenses to remain high in the first quarter
as the company continues to invest in its pipeline. Though
positive on the US approval of Biogen's oral multiple sclerosis
(MS) treatment, Tecfidera, we note that it is the third oral MS
product to reach the market. Consequently, Biogen's sales force
has its task cut out as patients and physicians will have to be
convinced to switch over to Tecfidera. Slower-than-expected ramp
up of Tecfidera could adversely impact Biogen's results.
Our proven model does not conclusively show that Biogen is likely
to beat the Zacks Consensus Estimate in the first quarter. That
is because a stock needs to have both a positive earnings
Expected Surprise Prediction (ESP) (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank #1 (Strong Buy) or at least Zacks Rank #2
(Buy) or Zacks Rank #3 (Hold) for this to happen. Unfortunately
this is not the case here as elaborated below.
Negative Zacks ESP
: This is because the Most Accurate estimate stands at $1.55
while the Zacks Consensus is higher at $1.57. This results in a
difference of -1.27%.
Zacks Rank #3 (Hold)
: Biogen's Zacks Rank of 3 complicates the predictive power of
ESP. That said we need to have a positive ESP to be confident of
an earnings surprise call.
Stocks to Consider
Here are some companies you may want to consider on the basis of
our model which shows that they have the right combination of
elements to post an earnings beat this quarter:
Eli Lilly and Company
has an Earnings ESP of +3.85% and holds a Zacks Rank #3 (Hold).
Gilead Sciences Inc.
) has an Earnings ESP of +2.08% and carries a Zacks Rank #3.
) has an Earnings ESP of +11.77% and carries a Zacks Rank #3.