Will Intrexon (XON) Pull Off a Surprise in Q1 Earnings?

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Intrexon CorporationXON is expected to report first-quarter 2017 results on May 9.

The company missed expectations thrice in the four trailing quarters and matched estimates once, with an average negative surprise of 12.37%.

Intrexon Corporation Price and EPS Surprise

Intrexon Corporation Price and EPS Surprise | Intrexon Corporation Quote

Intrexon's share price has decreased 13.4% year to date compared with the Zacks classified Medical-Medical Services industry's loss of 2%.

Factors to Consider

The company follows a business model under which it commercializes its technologies through exclusive channel collaborations (ECC), licensing agreements and joint ventures with collaborators that have market and product development expertise, as well as sales and marketing capabilities to bring new and improved products and processes to market. Such agreements provide the company with funds in the form of technology access fees, and milestones and other payments.

We expect collaboration revenues to contribute significantly to the company's top line in the first quarter. However, any unfavorable outcome of development programs could result in the termination of an agreement, which may adversely affect Intrexon's revenues.

Intrexon is also developing several candidates in partnership with other companies. Intrexon in collaboration with Fibrocell Science, Inc. FCSC completed enrolment in a phase I/II study on FCX-007 for the treatment of recessive dystrophic epidermolysis bullosa. The second gene therapy candidate being developed by Fibrocell is FCX-013 for the treatment of linear scleroderma. An investigational new drug (IND) application for FCX-013 is expected to be filed in 2017. Another collaborator, Oragenics is developing a treatment for the prevention and treatment of oral mucositis and filed an IND update for a phase II study protocol in the first quarter of 2017.

Intrexon anticipates having up to 11 IND applications and initiations of clinical studies with the company's existing ECC partners utilizing its technologies by mid-2017, subject to FDA approval.

Intrexon has been quite active on the acquisition front. In Jan 2017, the company inked a deal to acquire GenVec, Inc., a clinical-stage company and pioneer in the development of AdenoVerse gene delivery technology. Intrexon plans to integrate and expand upon GenVec's expertise in adenoviral vectors and cGMP drug product manufacturing to enhance its broad gene transfer capabilities. Also, Intrexon formed a wholly-owned subsidiary - Precigen, Inc. as part of its structural alternatives and plans to consolidate all health-related assets under this new corporate entity to enhance shareholder value.

We expect investor focus to remain on the company's performance along with other developmental updates.

What Our Model Indicates

Our proven model does not conclusively show that Intrexon is likely to beat estimates 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) to surpass estimates. That is not the case here, as you will see below.

Zacks ESP: 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 and the Zacks Consensus Estimate stand at a loss of 23 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Though Intrexon has a favourable Zacks Rank #2, its 0.00% ESP makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some health care stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.

Expected to release results on May 10, Aurinia Pharmaceuticals Inc. AUPH has an Earnings ESP of +10% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here .

FibroGen, Inc. FGEN has an Earnings ESP of +23.81% and a Zacks Rank #3. The company is expected to release results on May 8.

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Fibrocell Science Inc (FCSC): Free Stock Analysis Report

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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.

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