A month has gone by since the las t earnings report for Ironwood Pharmaceuticals (IRWD). Shares have lost about 0.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Ironwood due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recen t earnings report in order to get a better handle on the important drivers.
Ironwood Q4 Earnings & Revenues Beat
Ironwood reported fourth-quarter 2018 adjusted loss of 2 cents per share, narrower than the Zacks Consensus Estimate of a loss of 17 cents as well as the year-ago loss of 14 cents.
Total revenues in the fourth quarter were $130.7 million, reflecting a surge of 38.7% from the year-ago period, mainly owing to Linzess' (linaclotide) sales growth, and higher (active pharmaceutical ingredient) API sales to Astellas in Japan. The top line also beat the Zacks Consensus Estimate of $86.72 million.
The Quarter in Detail
As reported by partner Allergan, Ironwood's key marketed product - Linzess -generated net sales of $205.2 million in the United States, up 5.3% year over year.
Ironwood's share of net profits from sales of Linzess in the United States (included in collaborative revenues) was $81.6 million in the fourth quarter, up approximately 6.5% year over year. Total commercial profit in the reported quarter was $146 million.
Sales of linaclotide API segment added $45.9 million to revenues including sales to the company's Japanese partner Astellas Pharma. The company also earned $3.2 million from linaclotide royalties, co-promotion and other revenues.
Per data provided by IQVIA (formerly Quintiles and IMS Health), Linzess prescriptions filled during the quarter were more than 868,000, up approximately 7% from the year-ago period while volume of prescribed Linzess capsules increased about 12%.
During the reported quarter, selling and administrative (SG&A) expenses inched up 0.5% to $58.2 million. Research and development (R&D) expenses were $44.3 million, up 10.5% from the year-earlier period.
The company is on track to complete its separation into two publicly trading entities in first-half 2019. For the new Ironwood, the company's board has picked Mark Mellon as its CEO. Meanwhile, Peter Hecht, the current CEO of Ironwood Pharma is set to lead the new company - Cyclerion.
Ironwood expects total revenues in the range of $370-$390 million during 2019. Net interest expenses are anticipated to be approximately $35 million.
The company will provide its earnings outlook for 2019 at a future investor update event following the conclusion of the business separation.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -300% due to these changes.
At this time, Ironwood has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Ironwood has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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