Regeneron Pharmaceuticals, Inc.REGN is scheduled to release first-quarter 2015 financial results before the opening bell on May 7, 2015.
The company has recorded positive earnings surprises in two of the trailing four quarters with an average beat of 9.31%. Let's see how things are shaping up for this announcement.
Eylea Holds the Key
Eye drug, Eylea is the key growth driver at Regeneron. Regeneron has co-developed Eylea with the HealthCare unit of Bayer BAYRY . Regeneron records the entire U.S. sales, while Regeneron and Bayer equally share the profits and losses from ex-U.S territories.
In the fourth quarter, U.S. sales of Eylea showed an improvement of 16.4% sequentially. In 2015, the company expects U.S. Eylea sales to grow 25-30% year over year. We believe sales of the eye drug could improve going forward benefiting from the inclusion of diabetic retinopathy, diabetic macular edema and macular edema after branch retinal vein occlusion indications in its label.
An upcoming pipeline catalyst for Regeneron includes a regulatory decision on the company's PCSK9 (proprotein convertase subtilisin/kexin type 9) antibody, Praluent, developed in collaboration with Sanofi. A decision is expected by Jul 24, 2015. The successful development of the candidates would boost the stock significantly.
Our proven model does not conclusively show that Regeneron is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below.
Zacks ESP: Earnings ESP for Regeneron is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $2.50 per share.
Zacks Rank: Regeneron carries a Zacks Rank #3 (Hold). Though a Zacks Rank #3 increases the predictive power, an ESP of 0.00% leaves the prediction inconclusive.
We caution against stocks with a Zacks Rank #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 some companies you may want to consider as our model shows that these have the right combination of elements:
The Earnings ESP for Actavis ACT is +0.78% and it carries a Zacks Rank #2. The company is scheduled to release results on May 11.
Tetraphase Pharmaceuticals, Inc. TTPH has an Earnings ESP of +6.06% and carries a Zacks Rank #3 (Hold). It is expected to report results on May 11.