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Radius Health (RDUS): Will It Disappoint in Q3 Earnings?

Radius Health, Inc.RDUS is scheduled to report third-quarter 2016 financial results on Nov 3, before the market closes.

Last quarter, the company recorded a negative earnings surprise of 3.06%. Radius Health has a disappointing track record so far. The company has missed estimates in all of the four trailing quarters with a negative average surprise of 10.89%. Will the company disappoint yet again? Let's see how things are shaping up for this quarter.

Factors at Play

Radius Health focuses on the development of therapeutics for the treatment of osteoporosis, oncology and endocrine diseases. But being a development-stage company with no approved products in its portfolio yet, Radius Health does not generate any revenue from product sales.

In this scenario, investors are expected to focus on pipeline updates by the company, during the upcoming earnings call.

The company's lead candidate, abaloparatide subcutaneous (abaloparatide-SC), is being developed for reducing the risk of fractures in postmenopausal osteoporosis. The candidate is under review in both the U.S. and the EU. An opinion from the European Medicines Agency's (EMA) Committee for Medicinal Products for Human Use (CHMP) for the marketing application is expected in late 2016 or in 2017. Meanwhile, the FDA has assigned a Prescription Drug User Fee Act (PDUFA) action date of Mar 30, 2017.

In August, the company announced positive results from the phase III ACTIVE study of abaloparatide for the treatment of postmenopausal women suffering from osteoporosis. Results showed that abaloparatide reduced the incidence of new vertebral fractures and nonvertebral fractures in postmenopausal women with osteoporosis at 18 months.

By Apr 2017, Radius Health expects to record product revenues.

Meanwhile the company has been looking for a partner to commercialize abaloparatide. It is also developing the abaloparatide-transdermal (abaloparatide-TD) patch for potential use in the treatment for osteoporosis.

Other candidates in Radius Health's pipeline include RAD1901 (in hormone-driven and/or hormone-resistant breast cancer, and vasomotor symptoms in postmenopausal women) and RAD140 (multiple indications including cancer). Research and development expenses are expected to record an upside thanks to pipeline development activities.

Earnings Whispers

Our proven model does not conclusively show that Radius Health 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. But 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 of a loss of $1.15 and the Zacks Consensus Estimate of a loss of $1.07, is -7.48%.

Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: Radius Health has a Zacks Rank #4. As it is, we caution against Sell-rated stocks (Zacks Rank #4 or #5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

RADIUS HEALTH Price and EPS Surprise

RADIUS HEALTH Price and EPS Surprise | RADIUS HEALTH Quote

Stocks to Consider

Here are a few pharma companies that you may consider instead, as our model shows that they have the right combination of elements to post an earnings beat this quarter.

The Earnings ESP for Zoetis Inc. ZTS is +2.17% and it carries a Zacks Rank #3. The company is slated to release third-quarter results on Nov 2.

Infinity Pharmaceuticals, Inc. INFI is scheduled to release third-quarter results on Nov 3 after market closes. The company has an Earnings ESP of is +5.81% and it sports a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Tesaro, Inc. TSRO is scheduled to report third-quarter results on Nov 3 after market the closes. It has an Earnings ESP of +2.08% and a Zacks Rank #3.

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RADIUS HEALTH (RDUS): Free Stock Analysis Report

INFINITY PHARMA (INFI): Free Stock Analysis Report

TESARO INC (TSRO): Free Stock Analysis Report

ZOETIS INC (ZTS): 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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