Horizon Pharma HZNP is scheduled to report second-quarter 2015 results before the opening bell on Aug 7. Last quarter, the company had posted a negative earnings surprise of 27.27%. Let’s see how things are shaping up for this announcement.
Factors at Play This Quarter
Horizon Pharma’s key marketed products including Actimmune should continue to do well this quarter. The company announced encouraging expected net sales for the second quarter of 2015 and upped its 2015 guidance on Jul 20.
The company expects second-quarter 2015 net sales in the range of $170 million to $172 million, up approximately 160% from the year-ago quarter and approximately 50% sequentially. The company also stated that the second-quarter adjusted EBITDA margin is expected to improve significantly on a sequential basis.
At that time, Horizon Pharma also raised its 2015 guidance based on strong performance through the first half of the year. The company now expects 2015 net sales to be around $660 million to $680 million as compared to the previous range of $590 million to $610 million. The Zacks Consensus Estimate is currently at $676 million. Horizon Pharma also raised its adjusted EBITDA guidance to the range of $265 million to $280 million from the previous range of $235 million to $250 million. We expect to see more details regarding adjusted EBITDA and additional data on Aug 7.
Meanwhile, the company has been quite active on the acquisition front over the past few quarters.
What Our Model Indicates
Our proven model does not conclusively show that Horizon Pharma is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to likely post an earnings beat. 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 pegged at 0.00%.
Zacks Rank: Horizon Pharma currently carries a Zacks Rank #2. Although the company’s Zacks Rank #2 enhances the predictive power of the ESP, the ESP of 0.00% makes a surprise prediction difficult.
We caution against stocks with a Zacks Rank #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 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.
The Earnings ESP for Immune Design Corp. IMDZ is +20.41% and it carries a Zacks Rank #3. The company is expected to release results on Aug 13.
Mylan MYL has an Earnings ESP of +1.15% and carries a Zacks Rank #3. The company is scheduled to release 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 results on Aug 6.
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