A month has gone by since the last earnings report for AVEO Pharmaceuticals (AVEO). Shares have added about 0.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is AVEO due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
AVEO Pharmaceuticals Q2 Earnings Beat, Revenues Lag
AVEO incurred second-quarter 2019 loss of 2 cents per share, narrower than the Zacks Consensus Estimate of a loss of 6 cents and the year-ago loss of 6 cents as well.
AVEO’s top line comprises collaboration and licensing revenues plus partnership royalties. Total revenues in the reported quarter were approximately $0.7 million, up from $0.4 million registered in second-quarter 2018. However, revenues missed the Zacks Consensus Estimate of $2 million.
Research & development expenses were down 46.9% year over year to $2.6 million. However, general and administrative expenses increased 7.1% year over year to $3 million.
AVEO expects that its present cash resources of $40.2 million along with the $25-million upfront payment from the Kyowa Kirin license amendment to be received in third-quarter 2019 will allow the company to invest in its planned operations through the third quarter of 2021.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted 25% due to these changes.
Currently, AVEO has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, AVEO has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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