Will Cubist Pharma (CBST) Miss Earnings? - Analyst Blog

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Cubist Pharmaceuticals, Inc. ( CBST ) is slated to report fourth quarter and full year 2013 results on Jan 23, 2014 after the closing bell. Last quarter, it posted a 25.45% negative surprise. Let us see how things are shaping up for this announcement.

Factors at Play

The key growth engine at Cubist Pharma is Cubicin (daptomycin), an antibiotic injection. The drug is expected to perform strongly as hinted by the preliminary sales data released by the biopharmaceutical company earlier this month. The preliminary results hinted at a 15% year-over-year growth in Cubicin sales to $248.9 million.

However, the bottom line is expected to be hurt by increased costs as Cubist Pharma is actively developing its pipeline. We expect the company to provide an update on its pipeline on Jan 23.

Earnings Whispers?

Our proven model does not conclusively show that Cubist Pharma is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Negative Zacks ESP :  That is because the Most Accurate estimate stands at 21 cents while the Zacks Consensus Estimate is higher at 31 cents. That is a difference of -32.26%.

Zacks Rank #3 (Hold) : Cubist Pharma's Zacks Rank #3 (Hold) complicates the predictive power of ESP because the Zacks Rank #3 when combined with a negative ESP makes surprise prediction difficult. We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Medivation, Inc. ( MDVN ) has an earnings ESP of +14.29% and carries a Zacks Rank #1 (Strong Buy).

Actavis ( ACT ) has an earnings ESP of +1.33% and Zacks Rank #1.

Sanofi ( SNY ) has an earnings ESP of +2.27% and Zacks Rank #3.



ACTAVIS PLC (ACT): Free Stock Analysis Report

CUBIST PHARM (CBST): Free Stock Analysis Report

MEDIVATION INC (MDVN): Free Stock Analysis Report

SANOFI-AVENTIS (SNY): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: ACT , CBST , MDVN , SNY

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