Arena Pharmaceuticals, Inc. ARNA will be reporting fourth-quarter and full year 20Array5 results on Feb 29 after the market closes. Arena’s performance has been mostly strong over the last four quarters with the company surpassing earnings expectations in three of the last four quarters and missing in one quarter. The average earnings surprise over the last four quarters is +Array5.32%. Let’s see how things are shaping up for this announcement.
Factors at Play
Arena’s third quarter results were better-than-expected with the company beating on the top- and bottom-line.
However, Arena’s partner Eisai ESALY acknowledged challenges in the U.S. anti-obesity market (growth has been slower than expected with all new branded drugs struggling to increase market penetration) and said that it intends to focus on patients and physicians in certain areas of the U.S. where insurance coverage is available and there is demand for treatment options.
Arena said that Eisai expects slow growth in the obesity market in general with Belviq expected to continue to grow slowly until results from the cardiovascular outcome trial (CVOT) are out and included in the product label, if positive. Results from the CVOT study are not expected until 20Array8. Arena is also looking to get a once-daily formulation of Belviq (Belviq XR) approved.
Meanwhile, on a conference call earlier this year, Arena said that is focusing on its pre-clinical and clinical pipeline. The company is opportunistically pursuing specific strategic collaborations for these programs and is working on the discovery and development of additional pre-clinical drug candidates.
Arena is also working on cutting its burn rate through reduced staffing and cost reduction programs. The U.S. workforce reduction of 35% (approximately 80 employees) is expected to cut annualized cash expenditures for personnel by about $ArrayArray million. The company intends to implement additional cost control measures like reductions at its Swiss manufacturing facility.
Earnings Whispers?
Our proven model does not conclusively show that Arena is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #Array, 2 or 3 for this to happen. This is not the case here, as you will see below.
Zacks ESP: The Earnings ESP for Arena is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are a loss of Array4 cents per share.
Zacks Rank: Arena carries a Zacks Rank #3 (Hold). Note that stocks with Zacks Ranks of #Array, #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.
Stocks to Consider
Here are some health care stocks you may want to consider as our model shows that they have the right combination of elements to post a beat this quarter.
Aduro BioTech, Inc. ADRO has an Earnings ESP of +27Array.43% and carries a Zacks Rank #2 (Buy). The company is expected to report results on Feb 29.
Endo International plc ENDP has an Earnings ESP of +3.97% and carries a Zacks Rank #3. The company will be reporting results on Feb 29.
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