It has been about a month since the last earnings report for Clovis Oncology (CLVS). Shares have lost about 12.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Clovis due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Clovis Q2 Loss Wider Than Expected, Revenues Beat
Clovis incurred an adjusted loss of $1.94 per share on a reported basis in the second quarter of 2018, wider than the Zacks Consensus Estimate of a loss of $1.38 but narrower than the year-ago loss of $3.88 per share. However, the adjusted loss for the quarter was $1.55 per share.
Net revenues, entirely from Rubraca, were approximately $23.8 million in the quarter, up 28.7% sequentially, due to an expanded label in earlier-line setting. Revenues beat the Zacks Consensus Estimate of $23 million. The company had recorded total revenues of $14.7 million entirely from Rubraca sales in the year-ago quarter.
Quarter in Detail
During the second quarter, research & development expenses increased 59.2% year over year to $52.7 million, primarily due to increased expenses for clinical studies on Rubraca. Selling, general and administrative (SG&A) expenses escalated 24.4% year over year to $44.9 million, reflecting increased activities to support commercialization of Rubraca in the United States as well as Europe.
Cash used in operating activities in the quarter was $110.2 million, higher than $69.1 million in the year-ago quarter. The increase was due to higher product supply costs as the company is building additional inventory prior to transition to new manufacturing facility for Rubraca. Moreover, Clovis paid $58 million to Pfizer in milestone payments related to approval of Rubraca in the United States and Europe.
Clovis ended the quarter with $682.2 million of cash equivalents and available-for-sale securities compared with $463.8 million as of Mar 31, 2018. The cash position was boosted by the proceeds from sales of common stock and issuance of convertible debt in April.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -32.51% due to these changes.
Currently, Clovis has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for momentum based on our style scores.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Clovis has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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