Exelixis, Inc. (EXEL) is slated to report its third-quarter 2014 results on Nov 4. In the last quarter, the company had reported a narrower loss than the Zacks Consensus Estimate by a penny. Let’s see how things are shaping up for this announcement.
Factors Influencing This Quarter
Exelixis continues to focus on the development and commercialization of its lead product, Cometriq — approved for the treatment of progressive, metastatic medullary thyroid cancer (MTC) in the U.S. The drug is also approved for the treatment of adult patients with progressive, unresectable, locally-advanced or metastatic MTC in the EU.
Cometriq is being evaluated for the indication of metastatic castration-resistant prostate cancer (mCRPC), metastatic renal cell cancer (RCC) and for the indication of advanced hepatocellular cancer (HCC). The phase III study, COMET-1, on Cometriq for mCRPC failed to meet the primary endpoint in Sep 2014.
Following the disappointing results from the study, Exelixis announced to reduce its workforce by almost 70% (160 employees) so that the company can utilize its resources for its other late-stage studies in metastatic RCC (the METEOR trial) and advanced HCC (the CELESTIAL trial). Top-line results from the METEOR and CELESTIAL studies are expected in 2015 and 2017, respectively. We expect the company to throw further light on its future development plans on the third-quarter call.
Expenses are projected in the range of $250 million to $280 million in 2014 and the company expects to end 2014 with $200 million in cash.
Meanwhile, Exelixis has a partnership with Roche (RHHBY) for pipeline candidate cobimetinib which is in the pivotal coBRIM trial, in combination with Zelboraf, in first-line patients with BRAF mutation-positive metastatic melanoma.
Earnings Whispers?
Our proven model does not conclusively show that Exelixis is likely to beat earnings 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: The Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is currently pegged at 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate both stand at a loss of 37 cents.
Zacks Rank: Exelixis carries a Zacks Rank #2 (Buy). Though Zacks Ranks #1, 2 or 3 increase the predictive power of ESP, the company’s ESP of 0.00% 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 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:
Hospira Inc. (HSP) has an earnings ESP of +5.66% and carries a Zacks Rank #3 (Hold). It is expected to report third-quarter results on Nov 6.
Actavis plc (ACT) has an Earnings ESP of +0.32% and holds a Zacks Rank #1 (Strong Buy). The company will report third-quarter results on Nov 5 before the market opens.
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