Exelixis, Inc.EXEL is scheduled to report third-quarter 2015 results on Nov 10 after the market closes.
The company surpassed expectations in three of the last four quarters with a positive average earnings surprise of 9.78%. The company however, posted a higher-than-expected loss in the second-quarter of 2015. Let's see how things are shaping up for this announcement.
Factors Influencing This Quarter
Exelixis has one sole marketed product in its portfolio - Cometriq. As a result, investor focus will remain on this product's performance as well as the company's plans for expanding its label.
In Oct 2015, Exelixis announced it has started submitting a rolling New Drug Application for Cometriq for the treatment of advanced renal cell carcinoma (RCC) patients who have received one prior therapy. The company has Breakthrough Therapy Designation for this indication and the company expects to finish the NDA submission by year end.
Exelixis and partner Genentech, a Roche Holding AG RHHBY company, have an important regulatory event coming up with the FDA expected to respond on the approval status of cobimetinib (in combination with zelboraf) for use in treatment-naïve patients suffering from locally advanced melanoma harboring a BRAF V600 mutation by Nov 11. A response in the EU, where the combination got a positive CHMP opinion, should be out by year end.
An update regarding the company's plans for the potential launch of the product, if approved, should be out on the call. An update on the company's partnering discussions for ex-U.S. territories for Cometriq should also be provided.
Meanwhile, during the quarter, Exelixis raised $146 million through the issuance of approximately 28.8 million shares. The company expects operating expenses in the second half of 2015 in the range of $80 million to $90 million.
What Our Model Indicates
Our proven model does not conclusively show that Exelixis 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) to be able to beat estimates. 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 0.00%. This is because both the Most Accurate estimate as well as the Zacks Consensus Estimate is at a loss of 20 cents.
Zacks Rank: Though Exelixis' Zacks Rank #2 increases the predictive power of the ESP, an ESP of 0.00% makes surprise prediction uncertain.
We caution against stocks with Zacks Ranks #4 and #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 couple of other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
The Earnings ESP for Affimed N.V. AFMD is +4.00% and it carries a Zacks Rank #3. The company is expected to release results on Nov 10.
Concordia Healthcare Corp. CXRX has an Earnings ESP of +2.24% and carries a Zacks Rank #1. The company is slated to release results on Nov 12.
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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.
