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Will Radius Health (RDUS) Disappoint This Earnings Season? - Analyst Blog

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Radius Health, Inc.RDUS is expected to report second-quarter results on Aug 6 before the market opens.

Although Radius Health beat earnings estimates in the last three trailing quarters, the company posted an average negative earnings surprise of 58.78% over the last four quarters. Let's see how things are shaping up for this announcement.

Factors Influencing First-Quarter Results

Radius Health is a development-stage company working on the development of potential treatment for osteoporosis. Hence, investors are expected to keep an eye on its pipeline progress.

The lead candidate at Radius Health is abaloparatide. The company is developing an injectable subcutaneous formulation of abaloparatide (abaloparatide-SC) for reducing the risk of fracture in postmenopausal women suffering from severe osteoporosis. Radius Health is preparing for the submission of a new drug application for abaloparatide-SC in the U.S. and a marketing authorization application in Europe for the reduction of risk of fracture in postmenopausal women with severe osteoporosis, later this year.

Meanwhile, Radius Health is also developing abaloparatide transdermal patch (abaloparatide-TD) for the treatment of osteoporosis. The company intends to advance abaloparatide-TD to the clinical stage in the second half of 2015. Apart from briefing on its efforts to sign a global collaboration agreement for abaloparatide-SC by the time of its launch, which is expected in 2016 (provided the candidate is approved), the company is expected to provide an update on the regulatory filing of abaloparatide-SC and development plans on abaloparatide-TD.

Additionally, Radius Health evaluating RAD1901 at high doses as a selective estrogen receptor degrader in a phase I study for metastatic breast cancer with the main objective determining the recommended dose for phase II study. Investor focus will remain on additional data from this study. In addition, Radius Health may discus its plans to initiate a phase I study on the candidate in the EU for metastatic breast cancer and a phase IIb study for the treatment of vasomotor symptoms.

The company may face an increase in research and development expenses due to pipeline development. General and administrative expenses may go up on account of legal fees and consulting support costs.

What Our Model Indicates

Our proven model does not conclusively show that Radius Health is likely to beat estimates this quarter. That 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 be able to beat earnings. Unfortunately, that is not the case here as you will see below.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -6.00% since the Most Accurate estimate stands at a loss of 53 cents, while the Zacks Consensus Estimate is a loss of 50 cents.

Zacks Rank: Radius Health carries a Zacks Rank #2. Though Radius Health's Zacks Rank #2 increases the predictive power of ESP, the company's negative Earnings ESP makes a 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 That Warrant a Look

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:

Mylan MYL has an Earnings ESP of +1.15% and carries a Zacks Rank #3. The company is scheduled to release second-quarter results on Aug 6.

Epizyme, Inc. EPZM has an Earnings ESP of +3.08% and carries a Zacks Rank #2. The company is slated to release second-quarter results on Aug 6.

Inovio Pharmaceuticals, Inc. INO has an Earnings ESP of +275.00% and carries a Zacks Rank #3. The company is slated to release second-quarter results on Aug 10.

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MYLAN NV (MYL): Free Stock Analysis Report

EPIZYME INC (EPZM): Free Stock Analysis Report

INOVIO PHARMAC (INO): Free Stock Analysis Report

RADIUS HEALTH (RDUS): 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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