What's in Store for BioMarin (BMRN) This Earnings Season?

BioMarin Pharmaceutical Inc.BMRN will report third-quarter 2017 results on Oct 26, after the market closes . BioMarin delivered a positive earnings surprise of 168.18% in the last quarter.

BioMarin's earnings track record has been strong, with the company beating estimates in each of the past four quarters, delivering an average positive surprise of 99.93%.

BioMarin's shares are up 5.9% so far this year. This compares unfavorably with 10.2% increase registered by the industry during this period.

Factors at Play

Key orphan disease drugs, Vimizim and Kuvan, which have been driving BioMarin's top line for some time now, are likely to maintain the trend this quarter too. Robust patient growth and penetration are likely to propel sales of the drugs. The Zacks Consensus Estimate for Vimizim and Kuvan for the third quarter is $103 million and $102 million, respectively.

However, Naglazyme and Vimzin revenues may vary on a quarterly basis due to inconsistent ordering patterns from some countries. Last week, at its R&D day, the company said that a slowdown in Federal purchasing orders in Brazil will hurt Naglazyme and Vimizim product revenues in the third quarter. Moreover, the company said that if the slowdown continues in the fourth quarter, it will only be able to meet the lower end of the total product revenue guidance ($1.25 billion and $1.3 billion, not including a $35 million milestone payment from Sarepta Therapeutics, Inc. [ SRPT ]) for 2017. On the other hand, if orders in Brazil are as expected, it will meet the mid-point of the guidance.

Nevertheless, the drugs continue to witness steady patient growth and we expect the trend to continue this quarter.

We expect management to discuss how the pipeline is progressing at the conference call. Brineura was approved in both the U.S. and EU this year for the treatment of children with CLN2 disease - a form of Batten disease. Though Brineura generated sales of only $0.3 million in the second quarter, we expect higher sales this quarter.

At the Q3 investor call, we also expect management to comment on Brineura's early launch progress and also on the launch preparation for pegvaliase. Pegvaliase, developed for treating phenylketonuria (PKU), is under review in the United States with the FDA expected to give its decision in the first half of next year.

Importantly, at the Q2 call, the company had said that due to the ramp up of BMN 270 and vosoritide programs, R&D spending is expected to be higher in the third and the fourth quarters. This will result in lower adjusted net income in these quarters compared to the first and second.

Earnings Whispers

Our proven model does not conclusively show that BioMarin is likely to beat on earnings this quarter. This 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: Its Earnings ESP is -9.65% as the Most Accurate estimate stands at a loss of 14 cents while the Zacks Consensus Estimate is pegged at a loss of 13 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: BioMarin's Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings beat.

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.

Stocks to Consider

BioMarin Pharmaceutical Inc. Price and EPS Surprise

BioMarin Pharmaceutical Inc. Price and EPS Surprise | BioMarin Pharmaceutical Inc. Quote

Some stocks in the Biomed/Genetics sector that have both a positive ESP and a favorable Zacks Rank are:

Gilead Sciences, Inc. GILD with an Earnings ESP of +0.23% and a Zacks Rank #3. The company is scheduled to release results on Oct 26.

Also scheduled to release results on Oct 26, Alexion Pharmaceuticals, Inc. ALXN has an Earnings ESP of +0.44% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank stocks here .

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Alexion Pharmaceuticals, Inc. (ALXN): Free Stock Analysis Report

BioMarin Pharmaceutical Inc. (BMRN): Free Stock Analysis Report

Gilead Sciences, Inc. (GILD): Free Stock Analysis Report

Sarepta Therapeutics, Inc. (SRPT): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

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.

More Related Articles

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.