Horizon Pharma HZNP is expected to report fourth-quarter 20Array5 results on Feb 29. The company has posted a positive earnings surprise in two of the trailing four quarters, with an average negative earnings surprise of ArrayArray.34%. Let’s see how things are shaping up for this announcement.
Factors at Play This Quarter
The Primary Care business unit at Horizon Pharma has been performing well on the back of prescription growth. The company is working on increasing patient access to its products through the Prescriptions-Made-Easy program. Horizon Pharma’s key marketed products, including Actimmune, should continue to do well this quarter.
Meanwhile, the company has been quite active on the acquisition front over the past few quarters. Last year, it acquired Hyperion Therapeutics in a deal valued at about $Array.Array billion, which added a couple of urea-cycle disorder drugs to its portfolio, thereby strengthening its position in the orphan disease market.
Earlier this year, Horizon raised its 20Array6 net sales guidance on the back of the expected closure of the Crealta Holdings LLC acquisition later this week. We note that in Dec 20Array5, the company entered into a definitive agreement to acquire Crealta Holdings LLC in a cash deal valued at $5Array0 million. Consequently, the company expects net sales to be in the range of $Array.025 billion to $Array.050 billion.
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 #Array (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. 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%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 4Array cents.
Zacks Rank: Horizon Pharma currently carries a Zacks Rank #Array. Although this enhances the predictive power of the ESP, the company’s ESP of 0.00% makes a surprise prediction difficult.
Note that we caution against stocks with Zacks Rank #4 or #5 (Sell rated) 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 Aduro BioTech, Inc. ADRO is +27Array.43% and it carries a Zacks Rank #2. The company is expected to release results on Feb 29.
Achillion Pharmaceuticals, Inc. ACHN has an Earnings ESP of +6.25% and a Zacks Rank #2. It is expected to release results on Mar 3.
Valeant Pharmaceuticals International, Inc. VRX has an Earnings ESP of +0.77% and a Zacks Rank #2. It is expected to release results on Feb 29.
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