What's in Store for Conatus (CNAT) this Earnings Season?
Conatus Pharmaceuticals Inc. CNAT is set to report third-quarter 2015 results on Nov 4. The company has delivered positive surprises in two of the last four quarters with an average beat of 6.09%. Let’s see how things are shaping up for this announcement.
Factors at Play
Conatus, a biotechnology company, currently has no approved products in its portfolio. Hence, the prime focus is on its lead candidate, emricasan, which is being developed for the treatment of patients with chronic liver disease.
The company is developing emricasan for the treatment of patients with chronic liver disease. Several phase I and phase II studies evaluated emricasan across a broad range of liver disease etiologies and stages of progression. The phase II program on emricasan includes the POLT-HCV-SVR study – in post-orthotopic liver transplant (POLT) recipients with liver fibrosis or cirrhosis post-transplant as a result of recurrent hepatitis C virus (HCV) infection, who have successfully achieved a sustained viral response (SVR) following HCV antiviral therapy; the portal hypertension study – in patients with liver cirrhosis (LC) and portal hypertension (PH); and the liver cirrhosis study – in patients with LC and model for end-stage liver disease (MELD) scores of 11 to 18.
The liver disease market is extremely crowded with the presence of established players like Gilead Sciences GILD. We expect investor focus to remain on emricasan, going forward.
What Our Model Indicates
Our proven model does not conclusively show that Conatus 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 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 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 37 cents.
Zacks Rank: Conatus currently carries a Zacks Rank #3. Although the company’s Zacks Rank #3 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.
The Earnings ESP for Alnylam Pharmaceuticals, Inc. ALNY is +2.31% and it carries a Zacks Rank #3. The company is expected to release results on Nov 4.
Merrimack Pharmaceuticals, Inc. MACK has an Earnings ESP of +2.44% and a Zacks Rank #3. It is expected to release results on Nov 9.
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GILEAD SCIENCES (GILD): Free Stock Analysis Report
ALNYLAM PHARMA (ALNY): Free Stock Analysis Report
MERRIMACK PHAR (MACK): Free Stock Analysis Report
CONATUS PHARMA (CNAT): Free Stock Analysis Report
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