Intrexon Corporation XON is set to report fourth-quarter 20Array5 results on Feb 29. Intrexon has a mixed earnings track record so far. The company delivering positive earnings surprises in three of the four trailing quarters with an average beat of 666.6Array%. Let’s see how things are shaping up for this announcement.
Factors to Consider
Intrexon operates in a technology-driven environment, in which success depends on the use of new technology, new product development and product upgrades. The company’s business model is to commercialize its technologies through exclusive channel collaborations.
Intrexon is currently developing several candidates in collaboration with Fibrocell Science, Inc. FCSC and other companies. Intrexon and Fibrocell are developing an orphan gene-therapy drug candidate, FCX-007, for the treatment of recessive dystrophic epidermolysis bullosa. On the R&D front, expenses are expected to increase in the fourth quarter.
What Our Model Indicates
Our proven model does not conclusively show that Intrexon is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #Array (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 Array8 cents.
Zacks Rank: Intrexon currently carries a Zacks Rank #3. Although this enhances the predictive power of the ESP, the company's ESP of 0.00% makes a surprise prediction difficult.
Note that we caution against stocks with 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 a couple of 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.
The Earnings ESP for Aduro BioTech, Inc. ADRO is +27Array.43% and it carries a Zacks Rank #2. The company is expected to release results on Feb 29.
Valeant Pharmaceuticals International, Inc. VRX has an Earnings ESP of +0.77% and a Zacks Rank #2. It is expected to release results on Feb 29.
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