Geron Corporation GERN is scheduled to report third quarter 2015 results on Nov 5 after the market closes. Geron’s performance over the last three quarters is mixed with the company missing expectations in one quarter, meeting expectations in another and beating in the second quarter of 2015. However, the average surprise over the last three quarters is -39.54%.
Let’s see how things are shaping up for the third quarter announcement.
Focus on Imetelstat
Geron’s second quarter loss was narrower-than-expected mainly due to lower operating expenses. R&D spend was lower reflecting the impact of lower personnel-related and other research costs resulting from the organizational resizing. We remind investors that in March, Geron had announced a restructuring plan under which the company reduced its workforce from 39 to 21.
However, R&D expenses should increase over the remainder of the year as the development of imetelstat continues in collaboration with Johnson & Johnson JNJ.
On Geron’s upcoming third quarter earnings update, investor focus will remain on imetelstat’s progress. At a recently held R&D day, Johnson & Johnson had provided an update on its pipeline candidates including imetelstat. The company is targeting regulatory filings for imetelstat for myelofibrosis and myelodysplastic syndrome in 2017.
Earnings Whispers?
Our proven model does not conclusively show that Geron 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: Earnings ESP for Geron is -154.55%. This is because the Most Accurate estimate is a loss of 6 cents while the Zacks Consensus Estimate is earnings of 11 cents per share.
Zacks Rank: Geron carries a Zacks Rank #3 (Hold). 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.
Other Stocks to Consider
Here are a couple of health care companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Sarepta Therapeutics, Inc. SRPT has an Earnings ESP of +10.08% and carries a Zacks Rank #3 (Hold). The company is expected to report results on Nov 5.
Merrimack Pharmaceuticals, Inc. MACK has an Earnings ESP of +2.44% and carries a Zacks Rank #3 (Hold). The company is expected to report results on Nov 9.
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