Synta Pharmaceuticals Corp. SNTA is scheduled to report second-quarter 2015 results before the opening bell on Aug 6. The company has recorded positive earnings surprises in two of the trailing four quarters with an average beat of 5.35%. Let’s see how things are shaping up for this announcement.
Factors at Play
Synta’s most advanced candidate, ganetespib, is being evaluated for several indications including non-small cell lung cancer, breast cancer, ovarian cancer and acute myeloid leukemia. Ganetespib is a novel heat shock protein 90 (Hsp90) inhibitor. Apart from ganetespib, the company has several early-stage candidates in its pipeline.
With no approved product in its portfolio, the company does not generate any revenue. However, the company’s research and development expenses are expected to increase as it continues to invest in its pipeline.
What Our Model Indicates
Our proven model does not conclusively show that Synta is likely to beat on earnings 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 likely post an earnings beat. 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 loss of 17 cents per share.
Zacks Rank: Synta currently carries a Zacks Rank #2 (Buy). Although the company’s Zacks Rank #2 enhances the predictive power of the ESP, the company’s ESP of 0.00% makes a 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 a few 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.
Momenta Pharmaceuticals Inc. MNTA has an Earnings ESP of + 74.36% and carries a Zacks Rank #3. The company is expected to release results on Aug 4.
The Earnings ESP for Immune Design Corp. IMDZ is +20.41% and it carries a Zacks Rank #3. The company is expected to release results on Aug 13.
Mylan MYL has an Earnings ESP of +1.15% and carries a Zacks Rank #3. The company is scheduled to release second-quarter results on Aug 6.
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