Why Is Clovis (CLVS) Down 21% Since Last Earnings Report?
A month has gone by since the last earnings report for Clovis Oncology (CLVS). Shares have lost about 21% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Clovis due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Clovis Q4 Earnings Lag Estimates, Rubraca Sales Recover
Clovis incurred an adjusted loss of $1.88 per share in the fourth quarter of 2018, wider than the Zacks Consensus Estimate of a loss of $1.68 and the year-ago loss of $1.27 per share.
Net revenues, entirely from Rubraca, were approximately $30.4 million in the quarter, up 33.3% sequentially. The top line, however, missed the Zacks Consensus Estimate of $30.57 million. The company had recorded total revenues of $17 million, entirely from Rubraca sales, in the year-ago quarter.
Clovis stated that the drug’s sales showed strong sequential growth in the fourth quarter as the company was able to expand the PARP inhibitor market through its awareness programs as well as increase its share in the segment. This fact is a breather for investors as, on its third-quarter earnings call, the company had said that it was facing stiff competition in capturing significant share in the ovarian cancer market. Rubraca sales in the quarter outpaced the company’s expectation of $22.8 million announced on the third-quarter earnings call.
Operating Expenses & Cash Details
During the fourth quarter, research & development expenses increased 87.4% year over year to $71.2 million primarily due to increased expenses for clinical studies on Rubraca in new oncology indications. Selling, general and administrative (SG&A) expenses escalated 27.6% year over year to $49.1 million, reflecting increased activities to support commercialization of Rubraca in the United States as well as Europe.
Cash used in operating activities in the quarter was $82.7 million, higher than $65.6 million in the year-ago quarter.
Clovis ended the quarter with $520.1 million of cash equivalents and available-for-sale securities compared with $604.4 million as of Sep 30, 2018.
Clovis recorded total revenues of $95.4 million in 2018, up 71.8% from year-ago period. However, adjusted loss per share for the year widened 27.5% to $6.53.
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 -14.88% due to these changes.
At this time, Clovis has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile 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 this revision indicates a downward shift. It's no surprise Clovis has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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