Emergent BioSolutions (EBS) is set to report second quarter 2014 results on Aug 7 after the market closes. Last quarter, the company delivered a negative earnings surprise of 17.65%. Let's see how things are shaping up for this announcement.
Factors Influencing This Quarter
Emergent has delivered positive earnings surprises in three of the last four quarters with an average beat of 27.83%. The company operates through two segments – Biodefense and Biosciences. The Biodefense segment focuses on government-sponsored development and supply of measures to counter bioterrorism threats. The unit includes both the marketed products at Emergent BioSolutions – BioThrax and Reactive Skin Decontamination Lotion (RSDL).
Emergent’s product sales increased 18% to $35.8 million in the first quarter of 2014 on the back of strong RSDL sales. The company’s product sales are expected to keep driving its topline in the second quarter as well. Emergent’s contracts and grants revenue in the quarter is also expected to increase.
Last quarter, BioThrax sales decreased 20% to $24.5 million due to the timing of deliveries to the Strategic National Stockpile. This may be matter of concern in the second quarter as well. The company’s increasing operating expenses will also affect bottom-line results.
Earnings Whispers?
Our proven model however does not conclusively show that Emergent is likely to beat earnings 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 Emergent is 0.00% since both the Most Accurate Estimate and the Zacks Consensus Estimate stand at 26 cents.
Zacks Rank #3 (Hold): Emergent’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.
VIVUS Inc. (VVUS) has an Earnings ESP of +6.45% and holds a Zacks Rank #3. VIVUS will be reporting second quarter earnings on Aug 7, after market closes.
Anacor Pharmaceuticals, Inc. (ANAC) has an Earnings ESP of +3.18% and holds a Zacks Rank #2 (Buy). Anacor will be reporting second quarter earnings on Aug 7 after market closes.
Myriad Genetics Inc. (MYGN) has an earnings ESP of +4.35% and holds a Zacks Rank #1(Strong Buy). Myriad will report fiscal fourth quarter 2014 earnings on Aug 12, after market closes.
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