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Bluebird (BLUE) Down 19.4% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

A month has gone by since the last earnings report for Bluebird Bio (BLUE). Shares have lost about 19.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Bluebird due for a breakout? 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.

bluebird's Loss Wider Than Expected, Revenues Beat

bluebird reported a loss of $3.55 per share in the second quarter of 2019, wider than the Zacks Consensus Estimate of a loss of $3.03 and the year-ago quarter’s loss of $2.91.

Revenues of $13.3 million beat the Zacks Consensus Estimate of $11 million. Revenues were up from $7.9 million in the year-ago quarter. The increase was mainly attributable to higher collaboration revenues under the company’s arrangement with Celgene Corp. and elevated license and royalty revenues.

Quarter in Detail

R&D expenses escalated to $146.5 million in the second quarter of 2019 from $115 million a year ago, due to costs incurred by the company to advance and expand the pipeline.

G&A expenses of $68.6 million were up 66.5% from the year-ago quarter, due to the overall growth of the pipeline and commercial-readiness activities.

Pipeline Development

bluebird’s pipeline progress has been impressive in the second quarter. The pipeline includes candidates for severe genetic diseases. The company’s portfolio consists of candidates like LentiGlobin for the treatment of transfusion-dependent β-thalassemia (TDT) and severe sickle cell disease (SCD), and Lenti-D for the treatment of cerebral adrenoleukodystrophy (CALD).

In June 2019, the European Commission (EC) granted conditional marketing authorization to Zynteglo (autologous CD34+ cells encoding βA-T87Q-globin gene, known as LentiGlobinfor TDT), a gene therapy for patients 12 years or older with transfusion-dependent β-thalassemia (TDT), who do not have a β00 genotype and for whom hematopoietic stem cell (HSC) transplantation is appropriate but a human leukocyte antigen (HLA)-matched related HSC donor is not available. Zynteglo is bluebird’s first gene therapy to obtain regulatory approval.

The company expects to initiate a rolling biologics licensing application submission to the FDA for Zynteglo in patients with TDT and non-β00 genotypes by the end of 2019.

The company also plans to initiate a phase III HGB-210 study of LentiGlobin in patients with SCD by the end of 2019.


 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -8.28% due to these changes.

VGM Scores

At this time, Bluebird has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Bluebird has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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