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Is a Beat in Store for Avadel (AVDL) This Earnings Season?

We expect Avadel Pharmaceuticals plc AVDL to beat expectations when it reports first-quarter 2020 results.

In the last reported quarter, Avadel delivered a positive earnings surprise of 72.00%.

Shares of Avadel have rallied 47.7% so far this year against the industry’s decrease of 12.1%.

Let’s see how things have shaped up for this announcement.

Factors to Note

Avadel currently markets a portfolio of sterile injectable drugs developed under its unapproved marketed drug (UMD) program. Avadel’s top line mainly comprises sales of these sterile injectable drugs used in hospital setting. In the last reported quarter, the company saw a sequential and yearly decline in revenues due to lower overall sales volume for hospital products as a result of increased market competition. This trend is most likely to have continued in the to-be-reported quarter.

Notably, in December 2019, the company got the FDA nod for its fourth product, Nouress, a cysteine hydrochloride injection for treating neonate patients requiring total parental nutrition. We expect an update from management on the commercialization plan for Nouress in the United States during the upcoming investors’ call.

Key Developments

Avadel is developing its lead product candidate, FT218, an investigational once-nightly formulation of sodium oxybate for the treatment of excessive daytime sleepiness (EDS) and cataplexy in narcolepsy patients.

The developmental activities related to FT218 are likely to have escalated operating expense in the first quarter.

In April 2020, the company announced positive top-line results from the pivotal phase III study, REST-ON, which evaluated FT218 for the given indication. This late-stage study met its three co-primary efficacy endpoints with all three doses of FT218 (9 g, 7.5 g and 6 g), thus demonstrating highly significant, clinically meaningful improvements compared to placebo.

We expect management to update the next step in developing FT218 on the upcoming earnings call.

Why a Likely Positive Surprise?

Our proven model predicts an earnings beat for Avadel this time around.  The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Avadel has an Earnings ESP of +6.25%, which represents the difference between the Most Accurate Estimate (loss of 25 cents per share) and the Zacks Consensus Estimate (loss of 27 cents).

Zacks Rank:  Avadel currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Avadel Pharmaceuticals plc. Price and EPS Surprise

Avadel Pharmaceuticals PLC. Price and EPS Surprise
Avadel Pharmaceuticals PLC. Price and EPS Surprise

Avadel Pharmaceuticals plc. price-eps-surprise | Avadel Pharmaceuticals plc. Quote

Other Stocks to Consider

Here are a few other drug/biotech stocks worth considering as our model shows that these too have the right combination of elements to beat on earnings in their upcoming releases.

Exact Sciences Corporation EXAS has an Earnings ESP of +2.28% and a Zacks Rank of 2. The company is scheduled to release first-quarter results on May 6.

Alexion Pharmaceuticals, Inc. ALXN has an Earnings ESP of +1.08% and a Zacks Rank #3. The company is scheduled to release first-quarter results on May 6.

Alnylam Pharmaceuticals, Inc. ALNY has an Earnings ESP of +4.44% and a Zacks Rank of 3. The company is scheduled to release first-quarter results on May 6.

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