What Awaits Synta Pharmaceuticals (SNTA) this Earnings?

Synta Pharmaceuticals Corp. SNTA is scheduled to report fourth-quarter 2014 results before the opening bell on Mar 12. Last quarter, the company posted a positive earnings surprise of 17.39%. The company has recorded positive earnings surprises in two of the trailing four quarters with an average beat of 5.35%. Let’s see how things are shaping up for this announcement.

Synta has no marketed product in its portfolio. The company did not record any revenue in the first three quarters of 2014. However, the company’s research and development expenses are expected to increase as it continues to invest in its pipeline. Synta’s lead pipeline candidate, ganetespib is being evaluated for several cancer indications including non-small cell lung cancer (NSCLC), acute myeloid leukemia and breast cancer.

Ganetespib is being evaluated in a pivotal phase III GALAXY-2 trial for the NSCLC indication. Interim data from this study should mature in the second half of 2015. Final data is expected in the first half of 2016.

Our proven model does not conclusively show that Synta is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Srong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below.

Zacks ESP: Earnings ESP for Synta is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 19 cents per share.

Zacks Rank: Synta carries a Zacks Rank #2. Synta’s Zacks Rank #2 when combined with an ESP of 0.00% 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.

Here are some companies you may want to consider as our model shows that these have the right combination of elements:

Catalyst Pharmaceutical Partners Inc. CPRX has an earnings ESP of +14.29% and carries a Zacks Rank #3. It is expected to report fourth-quarter results on Mar 18.

Kite Pharma, Inc. KITE has an earnings ESP of +25.00% and carries a Zacks Rank #3. It is expected to report fourth-quarter results on Mar 13.

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.