A month has gone by since the last earnings report for Nektar Therapeutics (NKTR). Shares have added about 7.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Nektar due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Nektar Q3 Earnings and Revenues Beat Estimates
Nektar Therapeutics incurred a loss of 56 cents per share for third quarter of 2018, narrower than the Zacks Consensus Estimate of a loss of 64 cents. The company had recorded a loss of 37 cents per share in the year-ago period.
Quarterly revenues were $27.8 million compared with the year-ago figure of $152.9 million. The significant decrease in revenues was attributable to $127.6 million in upfront fees received from Eli Lilly in the third quarter of 2017 related to development and commercialization collaboration deal of NKTR-358. The top line beat the Zacks Consensus Estimate of $25 million.
Quarter in Detail
The top line comprised product sales, royalty revenues, non-cash royalty revenues besides license, collaboration and other revenues.
In the third quarter, product sales declined 4.3% to $4.3 million from the year-ago period. However, non-cash royalty revenues increased 3.8% to $8.4 million.
The company reported royalty revenues of $10.3 million in the quarter, registering an improvement of 10.3% from $9.3 million a year ago.
License, collaboration and other revenues came in at $4.9 million compared with $131.1 million in the prior year. In the year-ago period, the company recorded upfront fees from Eli Lilly related to a license agreement for NKTR-358.
Research and development (R&D) expenses escalated 56.6% to $102.9 million, primarily due to investments in pipeline, including key candidates NKTR-358, NKTR-214 and NKTR-262. It also included costs related to filing of a new drug application ("NDA") for NKTR-181.
General and administrative (G&A) expenses were up 55.3% to $18.7 million in the reported quarter primarily owing to higher stock-based compensation expenses.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -6.52% due to these changes.
Currently, Nektar has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. 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 F. 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, Nektar has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.