Will Alexion's (ALXN) Earnings Streak End?

Zacks

Alexion Pharmaceuticals, Inc. (ALXN) is set to report its third quarter 2013 results on Oct 24 before the market opens. Last quarter, the company posted a 8.33% positive surprise - the eleventh consecutive outperformance– driven by the continued strong performance by Alexion’s sole marketed drug, Soliris. Let’s see how things are shaping up for this announcement.

Factors to consider this Quarter

Soliris is expected to continue its strong performance in the third quarter as well. Soliris is available in the U.S, EU, Japan and many other countries for the treatment of paroxysmal nocturnal hemoglobinuria (:PNH). PNH is a rare genetic blood disorder. Sales of the drug have been boosted further by its label expansion into the aHUS indication in the U.S. (Sept 2011) and the EU (Nov 2011). Japanese approval for Soliris in the aHUS indication came in Sep 2013.

Alexion expects to launch Soliris for the atypical hemolytic uremic syndrome (aHUS) indication in major EU nations during the course of 2013. Moreover, focus will also remain on updates regarding Alexion’s pipeline development. We believe that the pipeline at Alexion must deliver.

In Aug 2013, Alexion voluntarily recalled and replaced the remaining vials of a single lot of Soliris. Alexion stated that this voluntary move was prompted by the presence of visible particles in a few vials in a solitary lot of the drug. Though current supplies of Soliris may not be interrupted, we believe further slipups regarding Soliris will impact the drug’s supplies. This will be catastrophic for the company since it is entirely dependent on Soliris for growth. This excessive dependence on Soliris for growth is concerning.

Earnings Whispers?

Our proven model does not conclusively show that Alexion is likely to beat earnings this quarter. That is because a stock needs to have both a positive Zacks Earnings ESP (Expected Surprise Prediction) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here, as you will see below.

Zacks ESP: The Zacks ESP is 0.0%. This is because both the Most Accurate estimate and the Zacks Consensus stand at 71 cents per share.

Zacks Rank #1 (Strong Buy): Alexion carries a Zacks Rank #1. The Zacks #1 Rank when combined with a 0.0% ESP makes surprise prediction difficult.

Stocks to Consider

While an earnings beat cannot be predicted with certainty for Alexion, despite its impressive Zacks Rank, here are some firms you may want to consider on the basis of our model, which shows that they have the right combination of elements to post an earnings beat this quarter:

Endo Health Solutions Inc. (ENDP), with Earnings ESP of +2.66% and a Zacks Rank #1 (Strong Buy).

Mylan, Inc. (MYL), with Earnings ESP of +2.56% and a Zacks Rank #2 (Buy).

McKesson Corporation (MCK), with Earnings ESP of +0.99% and a Zacks Rank #2 (Buy).

Read the Full Research Report on ALXN
Read the Full Research Report on ENDP
Read the Full Research Report on MCK
Read the Full Research Report on MYL


Zacks Investment Research

View Comments