Sangamo Biosciences Inc. ( SGMO ) is set to report its third quarter 2014 results on Oct 22 after the market closes. Last quarter, the company had posted a positive earnings surprise of 33.33%. Let's see how things are shaping up for this announcement.
Higher Expenses May Hamper Improved Revenues
Sangamo's revenues, which increased 49.8% in the second quarter, are expected to increase in the third quarter as well. Revenues are expected to benefit from increased collaboration revenues from companies like Biogen Idec ( BIIB ).
Earlier this year, Sangamo inked a deal with Biogen on the development of therapeutics for hemoglobinopathies resulting from the abnormal structure or underproduction of hemoglobin. Sangamo received an upfront payment of $20.0 million from Biogen which is being recognized on a straight-line basis over an approximately 40-month period.
Meanwhile, Sangamo's total operating expenses are expected increase this quarter as well. The increased operating expenses are expected to be attributable to higher research and development expenses as the company continues to invest heavily in its pipeline.
Our proven model does not conclusively show that Sangamo is likely to beat its bottom-line estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: The Earnings ESP for Sangamo is 0.00% since the Most Accurate Estimate stands at a loss of 12 cents per share, in line with the Zacks Consensus Estimate.
Zacks Rank #3 (Hold): Sangamo's Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult.
Other Stocks to Consider
Here are some companies you may want to consider as our model shows that they have the right combination of elements -- a positive Zacks Earnings ESP and a Zacks Rank #1, 2 or 3 -- to post an earnings beat this quarter.
Teva Pharmaceutical Industries Limited ( TEVA ) has an earnings ESP of +5.79% and carries a Zacks Rank #2 (Buy). It is scheduled to report its third-quarter results on Oct 30.
The earnings ESP for Ligand Pharmaceuticals Inc. ( LGND ) is +30.00% and it carries a Zacks Rank #1 (Strong Buy). The company is scheduled to release its third-quarter results on Oct 27.