Radius Health, Inc. RDUS is expected to report first-quarter results on May 6 before the market opens.
Although Radius Health beat earnings estimates in the last two trailing quarters, the average negative earnings surprise over the last four quarters stands at 81.58%. Let’s see how things are shaping up for this announcement.
Factors Influencing First Quarter Results
Since Radius Health is a development-stage biopharmaceutical company, currently focused on the development of a potential treatment for osteoporosis, investors are expected to keep an eye on its pipeline progress.
The company is on track to complete the first six months of the ACTIVExtend study on its lead candidate abaloparatide-SC. First six-month data from the ACTIVExtend study should be out in the second quarter of 2015. Upon its completion, Radius Health intends to submit marketing applications in the U.S. and Europe in the second half of 2015. On its fourth-quarter call, the company said that it intends to enter a global collaboration for abaloparatide-SC by the time of its launch in ex-U.S. markets (provided that it is approved).
We expect the company to update its plans regarding abaloparatide-SC.
Additionally, Radius Health is developing RAD1901 at higher doses for the potential treatment of metastatic breast cancer or other estrogen receptor mediated oncology applications. At lower doses, RAD1901 has already shown efficacy for the treatment of vasomotor symptoms in a phase II proof-of-concept study. Radius Health intends to start a phase IIb study on RAD1901 for vasomotor symptoms in the second half of 2015. Additionally, the company intends to initiate a phase I study on the candidate in the EU in 2015.
What Our Model Indicates
Our proven model does not conclusively show that Radius Health 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) to be able to beat earnings. 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% since the Most Accurate estimate is in line with the Zacks Consensus Estimate of a loss of 51 cents.
Zacks Rank: Radius Health carries a Zacks Rank #3. Though a Zacks Rank #1, #2 or #3 increases the predictive power of ESP, the company’s ESP of 0.00% makes a surprise prediction difficult.
However, we caution against stocks with Zacks Ranks #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 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:
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.
Tetraphase Pharmaceuticals, Inc. TTPH has an Earnings ESP of +6.06% and a Zacks Rank #3. The company is scheduled to release first-quarter 2015 results on May 6.
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