Aerie Pharmaceuticals, Inc. AERI is expected to report fourth-quarter 2016 results on Mar 7. Last quarter, the company recorded a negative earnings surprise of 15.71%. In fact, Aerie’s performance over the last four quarters has been disappointing. The company reported a wider-than-expected loss in all the four trailing quarters, with an average negative earnings surprise of 19.36%.
Aerie’s share price has increased 25.1% year to date, while the Zacks classified Medical-Medical Services industry gained 5.5%.
Factors Influencing This Quarter
With no approved product in its portfolio, Aerie depends heavily on its late-stage candidates. Moving ahead, in the second half of 2017, the company expects to submit regulatory application for is leading candidate, Rhopressa, a once-daily formulation for lowering intraocular pressure (IOP) in patients suffering from open-angle glaucoma and ocular hypertension.
In fact, in Oct 2016 Aerie had withdrawn the new drug application (NDA) in the U.S. for Rhopressa as a third party manufacturing facility in Tampa, FL was not ready for pre-approval inspection. However, the company resubmitted the NDA for Rhopressa in Mar 2017, after notification by its contract drug product manufacturer that the vendor’s Tampa, Florida facility is now ready for pre-approval inspection by the FDA. The company expects a twelve-month FDA review process from the date of resubmission and expects to launch it in the second quarter of 2018.
Apart from Rhopressa, Aerie is also evaluating Roclatan, a once-daily, quadruple-action fixed-dose combination of Rhopressa and Xalatan (latanoprost). Roclatan is currently in a phase III registration studies – Mercury 1 and Mercury 2. Based on the success of the Mercury 1 and Mercury 2, the company plans to file a NDA for Roclatan too, by the end of 2017.
However, the operating expenses are likely to continue to be higher in the quarter due to increased activities related to the phase III programs for Roclatan, as well as preparatory activities associated with commercialization efforts for the same.
What Our Model Indicates
Our proven model does not conclusively show that Aerie 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 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, 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 27 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Aerie has a Zacks Rank #3, which increases the predictive power of ESP. However, 0.00% ESP makes surprise prediction difficult for the quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
Note that we caution against stocks with Zacks Ranks #4 or 5 (Sell-rated) going into an earnings announcement, especially when the company is seeing a negative estimate revision.
Aerie Pharmaceuticals, Inc. Price and EPS Surprise
Aerie Pharmaceuticals, Inc. Price and EPS Surprise | Aerie Pharmaceuticals, Inc. Quote
Stocks to Consider
Here are some health care stocks that you may want to consider, as our model shows that it has the right combination of elements to post an earnings beat this quarter.
Achillion Pharmaceuticals, Inc. ACHN has an Earnings ESP of +20% and a Zacks Rank #2. The company will release its next quarterly result in May
BioMarin Pharmaceutical Inc. BMRN has an Earnings ESP of +3.13% and a Zacks Rank #3. The company will release its next quarterly result in April.
Bristol-Myers Squibb Company BMY has an Earnings ESP of +5.41% and a Zacks Rank #3. The company will release its next quarterly result in April
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