What's in Store for Horizon Pharma (HZNP) in Q1 Earnings?

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Horizon Pharma plc  HZNP is scheduled to report first-quarter 2018 results on May 9, before the opening bell.

Last quarter, the company beat expectations by 31.82%. Let's see how things are shaping up for this quarter.

Horizon Pharma's shares have declined 2.5% in the year so far, compared with the industry 's decrease of 12.3%.

Factors to Consider

Horizon Pharma's Orphan and Rheumatology drugs performed well in 2017, registering double-digit growth except for Actimmune. However, declining sales in Primary care business offset the growth in the above two segments.

The Primary care business is likely to be under pressure due to the implementation of a new commercial model, as part of which the company is teaming up with pharmacy benefit managers and payers to help patients obtain access to its medicines.

We expect continued net sales growth for Ravicti in 2018, with room for additional uptake due to the recent label expansion. In February 2018, the company submitted a supplemental new drug application seeking label expansion of the drug to include newborns. The drug was also launched in Europe in March.

There was minimal impact on fourth-quarter sales of Procysbi due to the divestiture of European rights in June last year. However, this may impact sales negatively in the soon-to-be reported quarter. Meanwhile, the label expansion of the drug in December 2017 and launch in Canada will likely have a favorable impact.

The company continues to invest in the expansion of Krystexxa into nephrology indication and projects sales growth of more than 50% in 2018. .Horizon Pharma is also focused on its pipeline, including teprotumumab, with several ongoing clinical studies. This will likely increase operating expenses in the first quarter.

On the first-quarter earnings call, investors' focus will be on the performance of business units, along with that of products like Actimmune and Krystexxa and update on teprotumumab development.

Surprise History

Horizon Pharma's track record has been mixed so far with a four-quarter average positive earnings surprise of 68.92%. The company beat estimates thrice in the four trailing quarters while missing the same only once.

Earnings Whispers

Our proven model does not conclusively show that Horizon Pharma is likely to beat estimates this 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.

Zacks ESP:  Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -36.36%. This is because the Most Accurate estimate is pegged at 7 cents per share while the Zacks Consensus Estimate is pegged at 11 cents per share. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank:  Horizon Pharma's Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Horizon Pharma Public Limited Company Price and EPS Surprise

Horizon Pharma Public Limited Company Price and EPS Surprise | Horizon Pharma Public Limited Company Quote

Stocks That Warrant a Look

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

Adverum Biotechnologies, Inc. ADVM is expected to release results on May 8. The company has an Earnings ESP of +6.9% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank stocks here .

Aptevo Therapeutics Inc. APVO is scheduled to release results on May 11. The company has an Earnings ESP of +36.94% and a Zacks Rank #3.

Clovis Oncology, Inc. CLVS has an Earnings ESP of +6.44% and a Zacks Rank #2. The company is scheduled to release first-quarter results on May 8.

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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 Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: HZNP , CLVS , ADVM , APVO

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