Keryx Biopharmaceuticals, Inc. KERX is expected to report third-quarter 2016 results on Nov 3. Let’s see how things are shaping up for this announcement.
Factors Influencing This Quarter
Apart from license fees, Keryx’s top line comprises revenues generated by its only marketed product, Auryxia (ferric citrate). Auryxia is approved as tablets for the control of serum phosphorus levels in patients with chronic kidney disease (CKD) on dialysis.
However, on its last quarterly earnings call, Keryx announced an imminent interruption in the supply of Auryxia. The company stated that its contract manufacturer had issues related to the conversion of the active pharmaceutical ingredient (API) into the finished product, which will lead to a disruption in the supply of Auryxia. The company has exhausted its reserve of Auryxia and is currently working with the manufacturer to restock its inventory.
Keryx expects to restore normal supply of Auryxia and make the drug available to patients by the fourth quarter of 2016. Consequently, the company will not record any sales from Auryxia in the third quarter of 2016.
Moreover, the company has withdrawn its guidance for 2016 in anticipation of a supply interruption of Auryxia.
Meanwhile, Keryx is working on expanding ferric citrate's label. The company expects to file a supplemental new drug application (sNDA) with the FDA to include the treatment of iron-deficiency anemia stage III–V non-dialysis dependent CKD in this quarter.
In its upcoming conference call, we expect investors to focus on further updates by the company related to the supply of Auryxia.
Surprise History
Keryx’s track record has been disappointing so far. Over the four trailing quarters, the company posted an average negative earnings surprise of 27.71%, reporting in-line earnings only once in the last four quarters, and missing the same on all the other three occasions.
KERYX BIOPHARMA Price and EPS Surprise
KERYX BIOPHARMA Price and EPS Surprise | KERYX BIOPHARMA Quote
What Our Model Indicates
Our proven model, however, shows that Keryx is likely to beat estimates this quarter 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 be able to beat estimates, and Keryx has the right mix.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +9.09%. This is because the Most Accurate estimate stands at a loss of 20 cents, while the Zacks Consensus Estimate stand at a loss of 22 cents. Please check our Earnings ESP Filter that enables you find stocks that are expected to come out with earnings surprises.
Zacks Rank: Keryx’s Zacks Rank #2, when combined with its positive ESP, makes us reasonably confident of positive surprise this season.
Note that we caution against stocks with Zacks Ranks #4 or 5 (Sell-rated stocks) going into an earnings announcement, especially when the company is seeing a negative estimate revision momentum.
Stocks to Consider
Here are some health care stocks that you may want to consider, as our model shows that they too have the right combination of elements to post an earnings beat this quarter.
The Earnings ESP for Zoetis Inc. ZTS is +2.17% and it carries a Zacks Rank #3. The company is slated to release third-quarter results on Nov 2.
Infinity Pharmaceuticals, Inc. INFI is scheduled to release third-quarter results on Nov 3 after market closes. The company has an Earnings ESP of is +5.81% and it carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Tesaro, Inc. TSRO is scheduled to report third-quarter results on Nov 3 after market the closes. It has an Earnings ESP of +2.08% and a Zacks Rank #3.
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