Puma Biotechnology, Inc. ( PBYI ) is expected to report third-quarter 2014 results before the opening bell on Nov 11. Last quarter, the company had posted a negative earnings surprise of 53.57%. The four-quarter trailing average surprise is a negative 26.32%. Let's see how things are shaping up for this announcement.
Factors at Play
With no approved products in its portfolio, Puma Biotechnology is not expected to record any revenues in the third quarter as was the case in the previous quarters.
The company's operating expenses will continue to rise during the third quarter. Particularly, its research and development expenses are expected to go up during the quarter as it is investing heavily in its pipeline. The company's primary candidate, neratinib (PB272), is being evaluated for the treatment of different types of tumor in several mid- and late-stage studies. Puma Biotechnology has a licensing agreement with Pfizer ( PFE ) for neratinib.
Puma Biotechnology's general and administrative expenses, which increased in the last couple of quarters, may also increase in the third quarter. Higher operating expenses will continue to keep Puma Biotechnology's bottom line under pressure.
Our proven model does not conclusively show that Puma Biotechnology 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 Puma Biotechnology is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are a loss of $1.27 per share.
Zacks Rank: Puma Biotechnology carries a Zacks Rank #3 (Hold). Though a favorable Zacks Rank increases the predictive power of the ESP, the company's 0.00% ESP makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Mallinckrodt ( MNK ) has an earnings ESP of +3.73% and carries a Zacks Rank #2. It is expected to report fourth-quarter results on Nov 19.
Dendreon Corp. ( DNDN ) has an earnings ESP of +38.89% and carries a Zacks Rank #2. It is expected to report third-quarter results on Nov 11.