We expect Incyte Corporation INCY to surpass expectations when it reports second-quarter 2024 results on Jul 30, before the opening bell.
Let’s see how things have shaped up for the quarter to be reported.
Factors to Note
Incyte primarily derives product revenues from the sales of its lead drug, Jakafi (ruxolitinib), in the United States and other marketed drugs.
An increase in the sales of Jakafi, a first-in-class JAK1/JAK2 inhibitor in all approved indications (polycythemia vera, myelofibrosis and refractory acute graft-versus-host disease [GvHD]), is likely to have boosted revenues in the second quarter. However, competition from other approved drugs might have restricted its sales growth potential to some extent.
The Zacks Consensus Estimate for Jakafi's sales in the second quarter of 2024 is pegged at $673 million.
Incyte earns product royalty revenues from Novartis AG NVS for the commercialization of Jakafi in ex-U.S. markets. Novartis licensed ruxolitinib for its development and commercialization outside the United States.
While Incyte markets Jakafi in the United States, Novartis promotes the same drug as Jakavi in ex-U.S. markets. INCY is expected to have received higher royalties from NVS in the to-be-reported quarter on higher Jakavi sales.
Novartis reported a strong performance of Jakavi in the second quarter, with sales of the drug witnessing a 13% increase on a constant currency basis. Hence, royalties from the same are likely to have been higher.
Incyte also receives royalties from the sales of Tabrecta (capmatinib), which is approved for treating adult patients with metastatic non-small cell lung cancer. Novartis has exclusive worldwide development and commercialization rights to Tabrecta.
Shares of Incyte have risen 4.8% in the year-to-date period against the industry’s decline of 2%.
Image Source: Zacks Investment Research
Incremental sales from newly approved drugs like Opzelura (ruxolitinib) cream and Zynyz are expected to have boosted Incyte’s revenues in the to-be-reported quarter.
Growth in Opzelura sales is likely to have been driven by factors like increasing patient demand, refills and expansion in payer coverage in the second quarter of 2024. The Zacks Consensus Estimate for Opzelura sales in the second quarter is pegged at $112 million.
In February 2024, Incyte entered into an asset purchase agreement with MorphoSys AG. This gave Incyte exclusive global rights for tafasitamab, a humanized Fc-modified CD19-targeting immunotherapy marketed, in the United States (as Monjuvi) and outside the country (as Minjuvi).
While Jakafi’s sales and royalties are the key catalysts for INCY’s revenue growth, sales of other drugs like Minjuvi, Pemazyre, Iclusig and Olumiant’s royalties from Eli Lilly are also likely to have contributed to Incyte’s top line in the to-be-reported quarter.
The Zacks Consensus Estimate for Iclusig, Minjuvi and Pemazyre sales in the second quarter is pegged at $30.12 million, $27.49 million and $20.62 million, respectively.
Higher research and development expenses, as well as increased selling and general and administrative costs, are likely to have escalated operating expenses in the second quarter of 2024.
Earnings Surprise History
Incyte has a mixed record of earnings surprise history. The company beat estimates in two of the trailing four quarters and missed on the remaining two occasions, delivering an average negative earnings surprise of 6.24%. In the last reported quarter, INCY delivered a negative earnings surprise of 27.27%.
Incyte Corporation Price and EPS Surprise
Incyte Corporation price-eps-surprise | Incyte Corporation Quote
Earnings Whispers
Our proven model predicts an earnings beat for Incyte this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is the case here, as elaborated below. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Incyte’s Earnings ESP is +7.41%. The Most Accurate Estimate currently stands at $1.25, while the Zacks Consensus Estimate is pegged at $1.16.
Zacks Rank: INCY has a Zacks Rank #3 at present.You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks to Consider
Here are some other stocks worth considering from the healthcare space, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.
Adverum Biotechnologies, Inc. ADVM has an Earnings ESP of +1.38% and a Zacks Rank #3.
Shares of Adverum Biotechnologies have gained 4.1% in the year-to-date period. Earnings of Adverum Biotechnologies beat estimates in two of the last four quarters and missed on the remaining two occasions. ADVM delivered an average negative earnings surprise of 1.55% in the last four quarters.
Amgen Inc. AMGN has an Earnings ESP of +1.03% and a Zacks Rank #3.
Shares of Amgen have risen 15.7% year to date. Amgen beat earnings estimates in each of the trailing four quarters. AMGN delivered an average earnings surprise of 6.42% in the last four quarters. AMGN is set to report second-quarter earnings on Aug 6.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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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.
