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Horizon (HZNP): What's in Store this Earnings Season?

Horizon PharmaHZNP is expected to report third-quarter 2015 results on Nov 6. The company has posted a positive earnings surprise in one of the trailing four quarters with an average negative earnings surprise of 3.29%. Let's see how things are shaping up for this announcement.

Factors at Play This Quarter

The Primary Care business unit at Horizon Pharma has been performing well on the back of prescription growth. The company is working on increasing patient access to its products through the Prescriptions-Made-Easy program. Horizon Pharma's key marketed products, including Actimmune, should continue to do well this quarter.

Meanwhile, the company has been quite active on the acquisition front over the past few quarters. Earlier this year, the company acquired Hyperion Therapeutics in a bid to strengthen its position in the orphan disease market with the addition of a couple of urea cycle disorder drugs to its portfolio.

The company expects 2015 net sales to be around $660 million to $680 million, representing growth of 125% at the midpoint. We expect to see more details regarding the guidance on the third-quarter conference call.

What Our Model Indicates

Our proven model does not conclusively show that Horizon Pharma 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. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 41 cents.

Zacks Rank: Horizon Pharma currently carries a Zacks Rank #3. Although this enhances the predictive power of the ESP, the ESP of 0.00% makes a surprise prediction difficult.

However, 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.

Stocks That Warrant a Look

Here are a few health care stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.

Merrimack Pharmaceuticals, Inc. MACK has an Earnings ESP of +2.44% and carries a Zacks Rank #3. The company is scheduled to release results on Nov 9.

Alnylam Pharmaceuticals, Inc. ALNY has an Earnings ESP of +2.13% and carries a Zacks Rank #3. The company is slated to release results on Nov 9.

Sarepta Therapeutics, Inc. SRPT has an Earnings ESP of +10.08% and carries a Zacks Rank #3. The company is expected to release results on Nov 5.

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ALNYLAM PHARMA (ALNY): Free Stock Analysis Report

HORIZON PHARMA (HZNP): Free Stock Analysis Report

MERRIMACK PHAR (MACK): Free Stock Analysis Report

SAREPTA THERAP (SRPT): Free Stock Analysis Report

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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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