Vertex Pharmaceuticals Inc. (VRTX) is scheduled to report second quarter 2014 results after market close on Jul 29.
Why a Likely Positive Surprise?
Our proven model shows that Vertex Pharma is likely to post a narrower-than-expected loss because it has the right combination of two key ingredients.
Positive Zacks ESP: Vertex Pharma has an Earnings ESP of +5.41%. This is a meaningful and leading indicator of a likely positive earnings surprise for the shares.
Zacks Rank: Vertex Pharma carries a Zacks Rank #3 (Hold) which when combined with a +5.41% ESP makes us confident of a narrower-than-expected loss.
Note that stocks with Zacks Rank #1, 2 and 3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
Factors at Play
Last quarter, Vertex Pharma had posted a negative earnings surprise of 21.43%. Vertex Pharma had posted negative earnings surprises in the trailing four quarters with an average miss of 14.98%. So let’s see what has changed this quarter.
Vertex Pharma’s bottom line should benefit from the termination of development activities related to the hepatitis C virus (HCV) infection pipeline. This strategic move allowed Vertex Pharma to cut its losses considering the fact that significant advancements have been made in HCV treatment with the introduction of new oral treatments.
Meanwhile, cystic fibrosis drug Kalydeco should continue to perform well. Kalydeco, which gained FDA approval for eight additional mutations in Feb 2014, should see higher revenues with the expansion in patient population.
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows these also have the right combination of elements to post an earnings beat this quarter:
Teva Pharmaceutical Industries Ltd. (TEVA) has an earnings ESP of +6.67% and carries a Zacks Rank #2. It is expected to report second-quarter results on Jul 31 before market opens.
Endo International (ENDP) has an earnings ESP of +1.11% and carries a Zacks Rank #2. Endo will report second quarter earnings on Jul 31 before market opens.
Impax Laboratories (IPXL) has an earnings ESP of +26.83% and holds a Zacks Rank #3. Impax will report second quarter earnings on Aug 6 before market opens.
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