We expect Inovio Pharmaceuticals, Inc. INO to beat expectations when it reports second-quarter 2015 results on Aug 10.The company has recorded positive earnings surprises in one of the trailing four quarters with an average miss of 100.21%. Let’s see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Inovio is likely to report a narrower-than-expected loss because it has the right combination of two key ingredients – a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to likely surpass estimates.
Positive ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at +275%. This is a meaningful indicator of a likely positive earnings surprise for the shares.
Zacks Rank: The combination of Inovio’s Zacks Rank #3 and +275% ESP makes us confident of a beat this season.
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.
Factors at Play This Quarter
Inovio is focused on the development of synthetic vaccines for the treatment of cancer and infectious diseases.
With Inovio not having any approved product in its portfolio, investor focus remains on pipeline updates. In fact, the company has a number of pipeline related activities lined up for 2015. VGX-3100 is the most advanced candidate in the company’s pipeline. VGX-3100 is being developed for the treatment of pre-cancerous cervical dysplasia. Based on encouraging top-line phase II data, the company intends to complete an end-of-phase-II meeting with the FDA in 2015 and begin dosing patients in a phase III study in early 2016.
Apart from VGX-3100, Inovio is working on the development of other candidates as well. The company is evaluating INO-3112 (a combination of VGX-3100 and its IL-12 immune activator) for HPV-caused cervical cancer and head and neck cancer. First interim data from phase I studies should mature in the second half of 2015. Apart from these the company has several early-stage candidates including INO-5150 (prostate cancer – phase I) and INO-1400 (breast, lung and pancreatic cancer – phase I).
During the fourth quarter of 2014, the company’s collaboration, option and license agreement with Roche RHHBY for the co-development of INO-5150 was terminated. Inovio will now be solely responsible for the development of the candidate and bear all related costs.
Other Stocks That Warrant a Look
Here are a few other 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.
BioDelivery Sciences International, Inc. BDSI has an earnings ESP of +6.45% and carries a Zacks Rank #3. It is set to report results on Aug 10.
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