A month has gone by since the last earnings report for Conatus Pharmaceuticals (CNAT). Shares have lost about 5.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Conatus 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.
Conatus’ Earnings, Revenues Miss Estimates in Q1
Conatus incurred a loss of 14 cents per share in the first quarter of 2019, wider than the Zacks Consensus Estimate of 12 cents but narrower than the year-ago quarter’s loss of 17 cents.
Revenues came in at $7 million, down 27.8% year over year due to lower reimbursement from partner Novartis for the costs incurred to support the development of emricasan. Moreover, the top line fell shy of the Zacks Consensus Estimate of $8 million.
Conatus has no approved product in its portfolio at the moment. The revenues generated by the company are all related to its collaboration with Novartis for the worldwide development and commercialization of emricasan.
In the first quarter, research and development expenses were $9.4 million, down 22.3% from the year-ago period’s figure, mainly on account of lower spending associated with the ongoing ENCORE-PH study on emricasan. This was partially offset by higher spending related to ENCORE-LF study.
General and administrative expenses were $2.6 million, marginally down from the year-earlier quarter’s $2.7 million.
Conatus expects the 2019-end balance in the range of $10-$15 million excluding any potential milestone fee under the Novartis collaboration.
As of Mar 31, 2019, Conatus had cash, cash equivalents and marketable securities of $33.8 million compared with $40.7 million as of Dec 31, 2018.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -38.1% due to these changes.
Currently, Conatus has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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, Conatus has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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