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Emergent (EBS) Beats Earnings, Revenue Estimates in Q4

Zacks Equity Research

Emergent BioSolutions, Inc. EBS reported earnings of 74 cents per share in the fourth quarter of 2016, which surpassed the Zacks Consensus Estimate of 60 cents. However, the reported figure decreased from 77 cents earned in the year-ago period.

The Emergent stock underperformed the Zacks classified Medical-Biomed/Genetics industry year to date. The company’s shares lost 9.4% compared with the industry’s increase of 5.9%.



Revenues in the reported quarter declined 5.1% from the year-ago period to $151.7 million, primarily due to lower BioThrax sales ($68 million), partially offset by increases in other product sales, contract manufacturing revenues as well as grant and contract revenues. The BioThrax procurement contract with the CDC (Centers for Disease Control and Prevention) was not signed until late fourth quarter, resulting in lower BioThrax shipments in the quarter than the comparable period in 2015.

Nonetheless, revenues beat the Zacks Consensus Estimates of $131 million.

Quarter in Detail

Total product sales were down 30% to $87.5 million from the year-ago period, mainly due to lower BioThrax deliveries under the company’s new contract with the CDC, signed in Dec 2016. Product sales from BioThrax plunged 61% to $43.8 million.

Contracts, grants and collaboration revenues soared 91% year over year to $47.5 million. The increase was driven by higher development funding for the Bayview facility in Baltimore, which has been designated as a Center for Innovation in Advanced Development and Manufacturing (CIADM) and plasma collection for the company’s VIGIV or Vaccinia Immune Globulin Intravenous (Human) program.

Contract manufacturing revenues came in at $16.7 million, up 59% year over year. The increase was primarily driven by the timing of fill/finish services.

Research and development expenses were $27.1 million, up 7% from the year-ago quarter. Selling, general and administrative expenses increased 1% to $35.4 million. The increase was primarily due to costs associated with the Aptevo spin-off.

2016 Results

Full-year sales of $488.9 million were almost in line with year-ago figure.

The full-year earnings of $1.48 per share beat the Zacks Consensus Estimate of $1.18. The company had posted earnings of $1.58 per share a year ago.

2017 Outlook

Emergent expects revenues in the range of $500 million to $530 million, including BioThrax sales of $265–$280 million. We note that the projected range of BioThrax sales is in line with preliminary results announced on Jan 9, 2017.

In the first quarter of 2017, the company lowered revenue expectations to the range of $110–$125 million from earlier guidance of $120–$135 million.

Emergent Biosolutions, Inc. Price, Consensus and EPS Surprise

Emergent Biosolutions, Inc. Price, Consensus and EPS Surprise | Emergent Biosolutions, Inc. Quote

Zacks Rank & Key Picks

Emergent currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector include Cellectis S.A. CLLS, Celgene Corporation CELG and Sunesis Pharmaceuticals, Inc. SNSS. While Cellectis sports a Zacks Rank #1 (Strong Buy), Sunesis Pharma and Celgene carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cellectis’s loss estimates narrowed from $2.33 to $1.80 for 2016 and from $2.94 to $1.69 for 2017 over the last 30 days. The company posted a positive surprise in three of the four trailing quarters with an average beat of 111.20%.

Celgene’s earnings estimates increased from $6.55 to $6.60 for 2017 and from $8.13 to $8.16 for 2018 over the last 30 days. The company posted a positive earnings surprise in three of the four trailing quarters with an average beat of 5.08%.

Sunesis’ loss estimates narrowed from $2.57 to $2.44 for 2016 and from $2.16 to $1.97 for 2017 over the last 60 days. The company posted a positive earnings surprise in three of the four trailing quarters with an average beat of 0.54%.

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