What's in Store for Ligand (LGND) This Earnings Season?

Ligand Pharmaceuticals Incorporated LGND is scheduled to report third-quarter 2020 results on Oct 30, before market open.

Ligand has a mixed earnings history. Its earnings beat estimates in three of the last four quarters while missing the same once, with the average earnings surprise being 19.89%. The company delivered an earnings surprise of 53.85% in the last reported quarter.

Shares of Ligand have declined 17.3% so far this year compared with the industry’s decrease of 4.9%.

Let’s see how things have shaped up for this announcement.

Factors at Play

Ligand earns revenues in the form of Royalties, Captisol sales, Service revenues and Contract revenues.

The majority of royalties comes from sales of Amgen’s AMGN Kyprolis, which was developed using Ligand’s Captisol formulation technology. High demand for Kyprolis has driven its sales in the past few quarters. We expect the trend to have continued in the third quarter, boosting Ligand’s royalties. However, Kyrpolis sales may have reflected lower patient visits to doctors amid COVID-19 pandemic. The Zacks Consensus Estimate for Royalties is pegged at $8.94 million.

Meanwhile, Ligand’s Captisol sales increased significantly in the second quarter driven by higher demand for Gilead’s GILD COVID-19 treatment, Veklury (remdisivir). The drug has been developed using Ligand’s Captisol technology. During the third quarter, Veklury was the only drug to have with Emergency Use Authorization for treating COVID-19, boosting its demand. Higher demand for Veklury is likely to have driven Ligand’s Captisol sales in the third quarter.

Service revenues and Contract revenues showed a downtrend in the first half of 2020. We expect the negative trend to have continued in the third quarter as well.

The company raised its revenue guidance on its second-quarter earnings call. The company expects revenues to be approximately $90 million in the second half of 2020. The Zacks Consensus Estimate for third-quarter revenues and earnings is pegged at $45.67 million and $1.06 per share, respectively.

Ligand’s partners are also progressing well with the development of the candidates with some of them under review or in late-stage studies. We expect the company to provide updates on the progress of partnered pipeline products.

Operating expenses differ on a quarterly basis, depending mainly on the timing of costs associated with internal programs and business development activities.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Ligand this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.

Earnings ESP: Ligand has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.06.  You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Ligand carries a Zacks Rank #3.

Ligand Pharmaceuticals Incorporated Price and Consensus

Ligand Pharmaceuticals Incorporated Price and Consensus

Ligand Pharmaceuticals Incorporated price-consensus-chart | Ligand Pharmaceuticals Incorporated Quote

Stock to Consider

Here is a biotech stock that you may want to consider, as our model shows that it has the right combination of elements to post an earnings beat in its upcoming release.

Incyte INCY has an Earnings ESP of +5.35% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here

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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.

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