Will Regeneron (REGN) Disappoint in Q4? - Analyst Blog

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Regeneron Pharmaceuticals, Inc. ( REGN ) is set to report its fourth quarter 2013 results on Feb 11 before the opening bell. Last quarter it posted a +104.04% surprise. Let's see how things are shaping up for this announcement.

Growth Factors this Quarter

Regeneron's third quarter 2013 earnings breezed past the Zacks Consensus Estimate primarily on the back of strong sales of its eye drug, Eylea. We note that Regeneron has co-developed Eylea with the HealthCare unit of Bayer ( BAYRY ). Eylea is expected to continue performing well in the coming quarters as well. Regeneron also managed to post positive earnings surprises in all of the last four quarters, with an average beat of 49.95%.


However, a number of negatives are likely to mar the overall results of Regeneron in the fourth quarter. Results will be affected by higher research and development expenses as Regeneron continues to develop its pipeline. Moreover, selling, general and administrative costs will increase due to costs associated with the marketing of Eylea. In addition to that, Regeneron's other two marketed drugs, Arcalyst and Zaltrap, are operating in highly competitive markets and will contribute meagerly to fourth quarter results.

Earnings Whispers?

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

Zacks ESP: The Earnings ESP for Regeneron is 0.00% since the Most Accurate Estimate stands at 99 cents, in line with the Zacks Consensus Estimate.

Zacks Rank #4 (Sell): Regeneron's Zacks Rank #4 makes matters worse. We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions, as is the case here.

Other Stocks to Consider

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

Aratana Therapeutics, Inc. ( PETX ) has an earnings ESP of +8.70% and holds a Zacks Rank #2 (Buy).

Pluristem Therapeutics, Inc. ( PSTI ) has an earnings ESP of +7.69% and holds a Zacks Rank #3 (Hold).



BAYER A G -ADR (BAYRY): Free Stock Analysis Report

ARATANA THERAP (PETX): Free Stock Analysis Report

PLURISTEM THERA (PSTI): Free Stock Analysis Report

REGENERON PHARM (REGN): 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 , Stocks

Referenced Stocks: BAYRY , PETX , PSTI , REGN

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