Endocyte, Inc. ECYT is slated to report its second-quarter 2015 results on Aug 4, 2015.
Endocyte beat estimates in three of the last four quarters with a positive average earnings surprise of 102.89%. Let’s see how things are shaping up for this announcement.
Factors Influencing the Second-Quarter
Being a development-stage biotech company, Endocyte has not generated any product revenue yet. Hence, investors are expected to keep an eye on pipeline development.
Both EC1456 (advanced solid tumors) and EC1169 (recurrent prostate cancer) are currently being evaluated in phase I studies. The company intends to expand both these studies upon the determination of the maximum-tolerated dose – EC1456 for multiple types of tumor including non-small-cell lung, ovarian and triple-negative breast cancers, and EC1169 for advanced prostate cancer.
Meanwhile, the phase II TARGET study on Vynfinit for non-small cell lung cancer is substantially complete, pending the receipt of final overall survival results. Results from the final overall survival analysis are expected by the third quarter of 2015.
Since the TARGET study is substantially complete, expenses associated with the study should decline considerably. Hence, overall expenditure may decline in the second quarter of 2015.
What Our Model Indicates
Our proven model does not conclusively show that Endocyte is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to announce an earnings surprise. That 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 0.00% since the Most Accurate estimate is in line with the Zacks Consensus Estimate of a loss of 30 cents.
Zacks Rank: Endocyte’s Zacks Rank #3 when combined with an Earnings 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 a negative estimate revision momentum.
Stocks That Warrants a Look
Here are some 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:
Aegerion Pharmaceuticals, Inc. AEGR has an Earnings ESP of +85.19% and carries a Zacks Rank #3. The company is scheduled to release second-quarter results on Aug 5.
Mylan N.V. MYL has an Earnings ESP of +1.15% and carries a Zacks Rank #3. The company is scheduled to release second-quarter results on Aug 6.
Epizyme, Inc. EPZM has an Earnings ESP of +3.08% and carries a Zacks Rank #2. The company is slated to release second-quarter results on Aug 6.
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