What's in the Cards for Aerie (AERI) This Earnings Season?
Aerie Pharmaceuticals, Inc. AERI is scheduled to report first-quarter 2018 results on May 8, after the market closes. Last quarter, the company reported a wider-than-expected loss.
Aerie Pharmaceuticals, Inc. Price, Consensus and EPS Surprise
Aerie Pharmaceuticals, Inc. Price, Consensus and EPS Surprise | Aerie Pharmaceuticals, Inc. Quote
Aerie’s performance over the last four quarters has been mixed. The company incurred a narrower-than-expected loss in two of the trailing four quarters while reporting wider-than-expected loss in the remaining two, with an average negative surprise of 3.12%.
Aerie’s shares have returned 32.3% over a year compared with the industry’s 3.8% gain.
Factors at Play
Aerie’s stock received a major boost in December 2017 with the FDA’s approval of lead candidate, Rhopressa 0.02% for the lowering of elevated intraocular pressure (IOP) in patients with open-angle glaucoma or ocular hypertension.
The news was a significant boost for Aerie given that the company had no approved products in its portfolio. The FDA approval comes two months ahead of the scheduled Prescription Drug User Fee Act goal date of Feb 28, 2018.
Glaucoma is one of the largest segments in the global ophthalmic market. According to the National Eye Institute, it is estimated that more than 2.7 million individuals in the United States suffer from glaucoma. This number is expected to reach 4.3 million by 2030.
Aerie expects Rhopress revenues in the range of $20-$30 million in 2018. The company recently announced that it has launched the drug in the United States. The company has hired all regional sales directors and district managers as well as more than 30 of an expected 100 territory managers.
The company expects to gain preferred formulary coverage for the majority of commercial payers for Rhopressa by late 2018 with most of the Medicare Part D coverage expected to commence in 2019. We expect management to throw more light on the drug’s launch during the first-quarter call.
Meanwhile, Aerie’s second product candidate, Roclatan (netarsudil/latanoprost ophthalmic solution) 0.02%/0.005% — which is a fixed dose combination of Rhopressa and Pfizer’s PFE Xalatan — achieved primary efficacy endpoint in two phase III registration trials, named Mercury 1 and Mercury 2.
The candidate also achieved successful 12-month safety and efficacy results in Mercury 1. The company expects to submit its NDA for Roclatan in second-quarter 2018. Investors will also be focussed on Aerie’s update on the same.
Earnings Whispers
Our proven model does not show that Aerie is likely to beat earnings 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, which is not the case here:
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 are pegged at a loss of 89 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 is favorable. However, we need to have a positive ESP as well to be confident of an earnings beat.
Note, we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement, especially when the company is seeing a negative estimate revision.
Stocks to Consider
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.
Celgene Corporation CELG is scheduled to release results on May 4. The company has an Earnings ESP of +0.63% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Adverum Biotechnologies, Inc. ADVM has an Earnings ESP of +6.90% and currently carries a Zacks Rank #3. The company is expected to release first-quarter results on May 8.
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