A month has gone by since the last earnings report for Emergent Biosolutions (EBS). Shares have lost about 0.9% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Emergent Biosolutions due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Emergent Earnings Miss in Q2, Revenues Beat Estimates
Emergent BioSolutions reported second-quarter 2019 earnings of 12 cents per share, which missed the Zacks Consensus Estimate of 16 cents and declined from the year-ago quarter’s figure of $1.07.
Revenues in the reported quarter increased 10.4% from the prior-year period to $243.2 million, primarily backed by high product sales owing to the company’s recent acquisitions and higher contracts plus grants revenues. The top line also beat the Zacks Consensus Estimate of $213 million.
Quarter in Detail
Total product sales inched up 1.9% to $183.5 million from the year-earlier quarter’s tally. This uptick was mainly on the back of contribution from Narcan nasal spray, which was acquired from Adapt Pharma, and other product sales. Newly acquired product Narcan (naloxone HCl) nasal spray added $73 million to product sales.
BioThrax’s sales plunged 64% year over year in the reported quarter to $28 million.
On the second quarter conference call management stated that though the U.S. government is mainly looking to stockpile AV7909, Emergent still expects the government to continue to procure BioThrax to support pre-exposure immunization programs.
Small pox vaccine ACAM2000, which was acquired from Sanofi, reported sales of $6.5 million, plummeting 88% year over year.
Contracts, grants and collaboration revenues skyrocketed 148.5% year over year to $41 million, primarily owing to greater R&D activities associated with certain development funding programs, most notably, the anthrax vaccine AV7909.
Contract manufacturing revenues decreased 20.8% to $18.7 million from the year-ago tally. This downside was primarily due to the contracted service work that took place in second-quarter 2018 but did not recur in the same period this year.
The company recorded adjusted EBITDA of $26.2 million in the reported quarter compared with $80.4 million in 2018, reflecting a drop of 67.4%.
Emergent retained its previously issued guidance for earnings and sales. It expects revenues in the range of $1.06-$1.14 billion in 2019. The company anticipates adjusted net income in the band of $150-$180 million and adjusted EBITDA in the bracket of $280-$310 million.
In the third quarter of 2019, the company anticipates total revenues within $245-$275 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -27.39% due to these changes.
At this time, Emergent Biosolutions has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Emergent Biosolutions has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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