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Is a Beat in the Cards for Agios (AGIO) in Q1 Earnings?

We expect Agios Pharmaceuticals, Inc.AGIO to surpass expectations when it reports first-quarter 2018 results on May 4, before the market opens. Last reported quarter, the company delivered a negative earnings surprise of 9.70%.

Shares of Agios have soared 67.7% in a year's time, comparing favorably with the industry 's increase of 12.5%.

The company's earnings track record shows mixed results with the company having outpaced estimates twice in the trailing four quarters and missed the same in the other two. Overall, Agios came up with an average negative surprise of 1.34%.

Let's see, how things are shaping up for this quarter.

Factors at Play

Agios' only marketed drug is Idhifa (enasidenib), which received an FDA approval last August for treatment of patients with relapsed or refractory acute myeloid leukemia (R/R AML) having an isocitrate dehydrogenase-2 (IDH2) mutation. Per the last report, the drug generated strong sales and we expect encouraging revenues in the first quarter as well.

Moreover, Agios' progress with the pipeline has been quite impressive. In fact, investors' focus will remain on the same in the to-be-reported quarter. Two interesting candidates in the company's cancer portfolio are IDH1 mutant inhibitor, AG-120 (ivosidenib) and a pan-IDH mutant inhibitor, AG-881.

Ivosidenib is under priority review in the United States for treating patients with R/R AML with an IDH1 mutation. An approval for ivosidenib is expected in the third quarter of 2018. Additionally, the company anticipates a regulatory filing for the candidate in the EU during the fourth quarter of 2018 for the same indication.

Ivosidenib is also being evaluated in phase I study for addressing advanced hematologic malignancies and combined with Celgene's CELG Vidaza, it is under assessment in phase I/II, for the cure of newly diagnosed AML patients, who are not eligible for an intensive chemotherapy.

Meanwhile, Agios is conducting phase I programs on AG-881 for treating patients with advanced IDH1 or IDH2 mutant-positive solid tumors including glioma. In the second half of 2017, the company announced positive findings from the study.

Notably, the company also plans to initiate a perioperative window trial to analyze ivosidenib and AG-881 in low grade glioma for investigating the effects on brain tumor tissue in the first half of 2018.

The company has another interesting candidate in its portfolio. Its lead rare genetic diseases candidate, AG-348, is under evaluation in a phase II trial on adult, transfusion-independent patients with Pyruvate kinase deficiency. Agios reported positive data from the program in June 2017. The FDA granted a fast track designation to the candidate for the given indication. As the RGD market still remains unexplored, newer therapies in this area hold huge potential.

Nonetheless, this March, Agios announced commencement of a phase I study, evaluating its first-in-class methionine adenosyltransferase 2a (MAT2A) inhibitor, AG-270, for patients with solid tumors or lymphoma with deletion of the MTAP. We expect management to produce an update on the same in first-quarter earnings release.

Earnings Whispers

Our proven model shows that Agios is likely to beat on earnings this reporting cycle because it has the right combination of the two key ingredients - a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) - for this to happen.

Zacks ESP: Agios has an Earnings ESP of +1.72%, representing the percentage difference between the Most Accurate estimate (loss of $1.57 per share) and the Zacks Consensus Estimate (loss of $1.60). A positive ESP indicates a likely earnings surprise. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Agios has a Zacks Rank #3, which increases the predictive power of ESP and together with a positive ESP, chances of an earnings beat in the stock's upcoming release are pegged higher.

We caution against all Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Agios Pharmaceuticals, Inc. Price and EPS Surprise

Agios Pharmaceuticals, Inc. Price and EPS Surprise | Agios Pharmaceuticals, Inc. Quote

Other Stocks to Consider

Here are some other health care stocks worth considering with the right combination of elements to beat estimates this time around:

Gilead Sciences, Inc. GILD is scheduled to report first-quarter 2018 financial numbers on May 1. The company has an Earnings ESP of +0.32% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here.

Pfizer Inc. PFE is scheduled to release quarterly results on May 1. The company has an Earnings ESP of +1.36% and a Zacks Rank of 2.

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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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