GW Pharmaceuticals plc GWPH is expected to report second-quarter fiscal 2015 results on May 6. Last quarter, the company posted a positive earnings surprise of 71.43%. The company has a solid track record having delivered positive surprises in three of the last four quarters with an average beat of 108.17%. Let’s see how things are shaping up for this announcement.
Factors at Play This Quarter
The company’s key growth driver, Sativex, approved outside the U.S. for the treatment of spasticity associated with multiple sclerosis, should continue to perform well in the second quarter of 2015. The company is also trying to expand the label of Sativex currently approved for the treatment of spasticity due to multiple sclerosis. Sativex is being evaluated in a phase III study for the treatment of pain associated with cancer.
The company expects a significant increase in cash burn in anticipation of the potential launch of Sativex in the U.S. and continued investments in the pipeline, particularly on Epidiolex.
Investor focus should remain on pipeline updates since a number of pipeline related activities are lined up for the rest of 2015.
Last month, the company reported the release of encouraging data by the American Academy of Neurology on its medicinal liquid form of marijuana candidate – Epidiolex. Data from an open-label study on Epidiolex showed a reduction in the rate of seizures in people with epilepsy, for whom all other available treatment options have failed. Epidiolex is currently being evaluated in two phase III studies for Dravet syndrome with phase III studies for Lennox-Gastaut syndrome expected to commence in the second quarter of 2015.
Earnings Whispers?
Our proven model does not conclusively show that GW Pharma is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below.
Zacks ESP: The Earnings ESP for GW Pharma is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are at a loss of $1.23 per share.
Zacks Rank: GW Pharma carries a Zacks Rank #1 (Strong Buy). Although the company carries a positive Zacks Rank, the 0.00% ESP makes surprise prediction difficult.
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.
Stocks That Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Tetraphase Pharmaceuticals, Inc. TTPH has an Earnings ESP of +6.06% and carries a Zacks Rank #3 (Hold). It is expected to report results on May 11.
Actavis plc ACT has an Earnings ESP of +0.78% and a Zacks Rank #2. The company is scheduled to release first-quarter 2015 results on May 11.
Impax Laboratories Inc. IPXL has an Earnings ESP of +15.00% and a Zacks Rank #3. The company is scheduled to release first-quarter 2015 results on May 11.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment