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Is a Beat in the Cards for Regeneron (REGN) Q2 Earnings?

Zacks Equity Research

Regeneron Pharmaceuticals, Inc. REGN is scheduled to release second-quarter 2019 results on Jul 6, before the opening bell.

In the last reported quarter, the company missed earnings expectations by 19.38%. Nevertheless, in the last four quarters, the company surpassed earnings estimates with average of 7.12%.

Medical - Biomedical and Genetics Industry 5YR % Return

 

Medical - Biomedical and Genetics Industry 5YR % Return

Medical - Biomedical and Genetics Industry 5YR % Return

Let’s see how things are shaping up for the to-be-reported quarter.

Why a Likely Positive Surprise?

Our proven model indicates that Regeneron is likely to beat on earnings this quarter, as it has the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to be able to beat estimates.

Earnings ESP: Earnings ESP for Regeneron is +3.64% as the Zacks Consensus Estimate is pegged at $5.42 and the Most Accurate Estimate at $5.62. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Regeneron currently carries a Zacks Rank #3, which when combined with a positive ESP makes us confident of an earnings beat.

Note, we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Factors Influencing This Quarter

Regeneron’s key drug, Eylea, continues momentum in the second quarter and should boost growth. Eylea was developed in collaboration with Bayer AG BAYRY. The drug is approved in the United States, the EU, Japan and other countries for the treatment of neovascular age-related macular degeneration (wet AMD), diabetic macular edema (DME) and macular edema following retinal vein occlusion, which includes macular edema following central retinal vein occlusion and macular edema following branch retinal vein occlusion.

The FDA recently approved Eylea for the treatment of diabetic retinopathy. Label expansion into additional indications would provide the drug access to a higher patient population and increase its commercial potential. Sales from Eylea should cross the $1-billion mark in the second quarter.

Apart from these, investors will be focusing on the uptake of Dupixent and its label expansion.

Dupixent sales have been impressive since its approval last year for the treatment of adults with moderate-to-severe atopic dermatitis (AD). We expect sales to be strong in the second quarter as well. Regeneron with partner Sanofi is also working to expand the drug’s label, which should diversify its revenue base and reduce dependence on the lead drug. The FDA also approved Dupixent for adolescent patients aged 12-17 years with moderate-to-severe atopic dermatitis. The agency recently approved the drug as an add-on maintenance treatment for adults with inadequately controlled severe chronic rhinosinusitis with nasal polyps (CRSwNP). The drug has also been approved for use in adults and adolescents aged 12 years or older as an add-on maintenance treatment for severe asthma with type 2 inflammation in Europe.

Kevzara, an anti-interleukin (IL)-6 receptor monoclonal antibody used for the treatment of adult patients with moderately- to severely-active rheumatoid arthritis, was approved by the FDA in May 2017. The uptake of the drug has been encouraging so far. Investors will focus on Kevzara’s sales as well in the upcoming quarterly results.

Investors will also focus on the performance of PCSK9 inhibitor, Praluent and Libtayo. Sanofi and Regeneron announced a 60% cut in the U.S. list price of Praluent in February. Moreover, in April, the FDA approved a label expansion of Praluent to reduce the risk of heart attack, stroke and unstable angina requiring hospitalization of adults suffering from established cardiovascular (CV) disease.

In September 2018, the FDA approved Libtayo for the treatment of patients with metastatic or locally advanced CSCC, who are not candidates for curative surgery or curative radiation. The initial uptake of the drug has been strong. The drug was recently approved in Europe. We expect strong uptake for the second quarter as well.

Share Price Performance

Regeneron’s stock has lost 17.2% in the year so far against the industry’s growth of 0.2%.

Other Stocks to Consider

Here are some other healthcare stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.

Rigel Pharmaceuticals, Inc. RIGL has an Earnings ESP of +8.77% and a Zacks Rank of 3. The company is scheduled to release second-quarter results on Aug 6. You can see the complete list of today’s Zacks #1 Rank stocks here.

Jazz Pharmaceuticals, Inc. JAZZ has an Earnings ESP of +1.77% and a Zacks Rank #3. The company is scheduled to release second-quarter 2019 results on Aug 6.

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