Can GW Pharmaceuticals (GWPH) Surprise in Q3 Earnings?
GW Pharmaceuticals plc GWPH is expected to report third-quarter fiscal 2016 results on Aug 4. Last quarter, the company had posted a positive surprise of 35.67%. Let’s see how things are shaping up for this quarter.
Factors to Consider
GW Pharma’s key growth driver is Sativex, which is approved outside the U.S. for the treatment of spasticity associated with multiple sclerosis. The company is also evaluating Sativex in a phase II study in children with spasticity due to cerebral palsy. Data from the study should be out in the fourth quarter of fiscal 2016.
GW Pharma has made significant progress with its lead pipeline candidate, Epidiolex (cannabidiol). Toward the end of the quarter, GW Pharma announced positive data from the first phase III study on Epidiolex, for the treatment of Lennox-Gastaut syndrome. Top-line data from the second study should be out shortly.
Earlier this year, the company had reported positive data from the first phase III study on Epidiolex for the treatment of Dravet syndrome. The company continues to enrol in the second phase III study. Backed by favorable phase III study results, the company plans to seek FDA approval for Epidiolex in the first half of fiscal 2017.
During the quarter, the company commenced a phase III study on Epidiolex as an adjunctive therapy for the treatment of seizures associated with tuberous sclerosis complex. Meanwhile, the company has selected infantile spasms as the fourth target indication for the development of Epidiolex. The company expects to initiate a two-part pivotal phase III study in the fourth quarter of fiscal 2016.
Investor focus is expected to remain on the company’s performance along with pipeline updates.
Surprise History
GW Pharma’s track record has been pretty good with the company reporting narrower-than-expected losses in three of the last four reported quarters. Overall, the company has delivered a positive surprise of 21.45%.
GW PHARMA-ADR Price and EPS Surprise
GW PHARMA-ADR Price and EPS Surprise | GW PHARMA-ADR Quote
What Our Model Indicates
Our proven model does not conclusively show that GW Pharma 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 post a beat. But 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%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of $1.73.
Zacks Rank: GW Pharma currently carries a Zacks Rank #3. Although the company’s Zacks Rank #3 enhances the predictive power of the ESP, its 0.00% ESP makes a surprise prediction difficult.
Note that we caution against stocks with a 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 few health care stocks that you may want to consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Exelixis, Inc. EXEL has an Earnings ESP of +3.70% and carries a Zacks Rank #3. The company is scheduled to report second-quarter results on Aug 3.
Intercept Pharmaceuticals, Inc. ICPT has an Earnings ESP of +5.05% and carries a Zacks Rank #3. It is scheduled to report second-quarter results on Aug 4.
BioMarin Pharmaceutical Inc. BMRN has an Earnings ESP of +4.00% and carries a Zacks Rank #3. It is also scheduled to report second-quarter results on Aug 4.
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BIOMARIN PHARMA (BMRN): Free Stock Analysis Report
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