Arena Pharmaceuticals, Inc. (ARNA) is scheduled to report fourth-quarter 2014 results on Mar 2. Last quarter, the company posted a positive earnings surprise of 61.54%. Let’s see how things are shaping up for this announcement.
Fourth Quarter in Focus
Sales of Arena Pharma’s sole marketed product, Belviq, increased sequentially in the third quarter. Arena Pharma has a collaboration agreement with Eisai Co., Ltd. (ESALY) for Belviq, under which Eisai is responsible for the marketing and distribution of the drug in the U.S.
However, U.S. sales of Belviq might get affected by the launch of another obesity drug, Contrave, (Oct 20, 2014) which recorded net sales of $6.5 million in the fourth quarter of 2014. We note that Contrave is also under review in the EU under the trade name Mysimba, with a final decision expected next month.
Meanwhile, Arena Pharma’s bottom line will continue to suffer from higher operating expenses. With Arena Pharma investing heavily in its pipeline, the company’s research and development expenses are expected to remain high in the fourth quarter.
Arena Pharma’s pipeline currently includes candidates like Ralinepag (pulmonary arterial hypertension, phase II), APD334 (ulcerative colitis and Crohn's disease, phase II study expected), temanogrel (thrombotic diseases, phase I) and APD371 (pain, phase I, data expected in the first quarter of 2015).
The company is expected to provide an update on its pipeline along with its fourth quarter results.
Earnings Whispers?
Our proven model does not conclusively show that Arena Pharma is likely to beat estimates 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: Earnings ESP for Arena Pharma is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are a loss of 13 cents per share.
Zacks Rank: Arena Pharma carries a Zacks Rank #3 (Hold). Though a favorable Zacks Rank increases the predictive power of the ESP, the company’s 0.00% ESP makes 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 to Consider
Here are some companies you may want to consider as our model shows that they have the right combination of elements to post a beat this quarter.
Amarin Corporation plc (AMRN) has an earnings ESP of +14.29% and carries a Zacks Rank #2. It is set to report fourth-quarter results on Mar 3.
Aratana Therapeutics, Inc. (PETX) has an earnings ESP of +10.00% and carries a Zacks Rank #3. It is expected to report fourth-quarter results on Mar 12.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment