Biogen BIIB, a strong player in the multiple sclerosis (MS) market, will be reporting first quarter 2015 earnings results on Apr 24, before the market opens.
Biogen’s performance has been strong for a major part of 2014 with the company beating earnings expectations in the last three quarters and missing in the first quarter of 2014. The average earnings surprise over the last four quarters is +11.6%.
Let’s see how things are shaping up for the first quarter of 2015.
Tecfidera Performance a Key Focus Area
Oral MS drug Tecfidera had experienced a moderation in new starts in the fourth quarter of 2014. Several factors were responsible for this, including a decline in the overall market switch rate. The U.S. label update of Tecfidera in December following the reporting of a progressive multifocal leukoencephalopathy (PML)-related death of a patient on Tecfidera as well as the launch of Plegridy also affected growth.
Plegridy has been capturing some interferon switches that would have otherwise gone to Tecfidera. The continuing impact of these factors will be a key focus area on the first quarter call. Meanwhile, the strengthening dollar will remain a headwind.
However, on a brighter note, the top-line should benefit from the continuing sales ramp up of Plegridy and the hemophilia products – Alprolix and Eloctate. Avonex and Tysabri should continue contributing significantly to the top-line.
Apart from Tecfidera’s scrip trends, investor focus will also be on the expected impact of the recent FDA approval of a generic version of Teva’s TEVA MS treatment, Copaxone.
What Our Model Indicates
Our proven model shows that Biogen is likely to beat earnings because it has the right combination of two key ingredients.
Positive Zacks ESP: Earnings Surprise Prediction or Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +0.51%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.
Zacks Rank #1 (Strong Buy): Note that stocks with Zacks Ranks of #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.
The combination of Biogen’s Zacks Rank #1 and +0.51% ESP makes us very confident in looking for a positive earnings beat on Apr 24.
Stocks That Warrant a Look
Here are a few health care stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.
Bristol-Myers Squibb BMY has an Earnings ESP of +2.00% and carries a Zacks Rank #3 (Hold). It is scheduled to report results on Apr 28.
United Therapeutics, Corp. UTHR has an Earnings ESP of +3.83% and a Zacks Rank #3. The company is also scheduled to release results on Apr 28.
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