Agenus (AGEN): What's Ahead for the Stock in Q3 Earnings?

Agenus Inc.AGEN is scheduled to report third-quarter 2016 results on Oct 27, before the opening bell. Last quarter, Agenus delivered a positive earnings surprise of 29.41%. Let's see how things are shaping up for the company this quarter.

Factors at Play

Agenus is an immuno-oncology company focused on the discovery and development of revolutionary new treatments that engage the body's immune system to fight cancer.

The company earns revenues primarily through fees received under collaboration and license agreements, which not only provide it with funds in the form of upfront and milestone payments and future royalties, but also validate the company's proprietary product platform. Collaboration revenues should continue to drive the top line in the third quarter as well.

Agenus is currently evaluating AGEN1884 in a phase I study for the treatment of advanced or refractory cancer, and INCAGN1876 (in partnership with Incyte Corporation INCY ) in a phase I/II study for the treatment of solid tumors. Consequently, research and development expenses are expected to increase sequentially.

In its third-quarter conference call, investor should remain focus on the company's update on the initiation of combination studies on these antibodies as well as the advancement of additional checkpoint modulator antibodies and vaccines into the clinic in the coming quarters.

We remind investors that Agenus' lead candidate and several backup antibodies were selected by Merck & Co., Inc. MRK for an undisclosed checkpoint target. Under the terms of the agreement, Agenus is eligible to receive up to $100 million in milestone payments, in addition to royalties on worldwide product sales.

Surprise History

Agenus' track record has been disappointing so far. The company has surpassed estimates in only once in the trailing four quarters and missed the same in all the other occasions, bringing the average negative surprise to 1.04%.

AGENUS INC Price and EPS Surprise

AGENUS INC Price and EPS Surprise | AGENUS INC Quote

Earnings Whispers

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

Zacks ESP: The Earnings ESP for Agenus is 0.00% since the Most Accurate estimate stands in line with the Zacks Consensus Estimate of a loss of 30 cents.

Zacks Rank: Agenus currently carries a Zacks Rank #3, which when combined with a 0.00% ESP, makes surprise prediction difficult.

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

A Stock That Warrants a Look

Here is a health care stock that you may want to consider, as our model shows that it has the right combination of elements to post an earnings beat this quarter.

Amgen Inc. AMGN is scheduled to report results on Oct 27. The company has an Earnings ESP of +1.08% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank stocks here .

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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.

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

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