Puma Biotechnology (PBYI) Q3 Earnings: What’s in Store?

Puma Biotechnology, Inc. PBYI is expected to report third-quarter 2016 results in November. The company’s track record has been mostly disappointing. While it missed estimates in two of the trailing four quarters, it met the same in one and surpassed in the other. The company recorded an average negative surprise of 5.23%.

Let’s see how things are shaping up for this announcement.

Neratinib in Focus

Puma Biotech has made significant progress with its lead candidate, neratinib. The candidate is currently under review in both the U.S. and the EU for the extended adjuvant treatment of HER2-positive early-stage breast cancer that has previously been treated with Herceptin-based adjuvant therapy.

We note that several phase II combination studies on neratinib for the treatment of breast cancer are currently underway.

At the time of announcing second-quarter 2016 results, the company projected that net loss may narrow in the subsequent quarters due to continued reduction in clinical trial expenses and expenses associated with the completion of regulatory filings for neratinib. The company also expects its research and development expenses to decrease in subsequent quarters for the same reasons.

Being a development-stage company, Puma Biotech does not have any approved product in its portfolio. Thus, investor focus should remain on updates pertaining to the development of neratinib.

Earnings Whispers

Our proven model does not conclusively show that Puma Biotech 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) 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 pegged at 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at a loss of $2.00. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: Although Puma Biotech’s carries a favorable Zacks Rank #2, its 0.00% ESP makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or 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 some health care stocks that you may want to consider instead, as our model shows that they have the right combination of elements to post an earnings beat this quarter.

ARIAD Pharmaceuticals Inc. ARIA is scheduled to report on Nov 7. It has an Earnings ESP of +5.26% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Synergy Pharmaceuticals, Inc. SGYP has an Earnings ESP of +18.18% and carries a Zacks Rank #3. It is expected to report on Nov 14.

ACADIA Pharmaceuticals Inc. ACAD has an Earnings ESP of +5.46% and carries a Zacks Rank #3. It is scheduled to report on Nov 7.

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