U.S. Markets closed

Geron (GERN) Up 2.4% Since Last Earnings Report: Can It Continue?

Zacks Equity Research

A month has gone by since the last earnings report for Geron (GERN). Shares have added about 2.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Geron due for a pullback? 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 catalysts.

Geron Q3 Earnings Beat Estimates

Geron incurred a loss of 8 cents per share in third-quarter 2019, narrower than the Zacks Consensus Estimate of a loss of 14 cents. In the year-ago quarter, the company had incurred a loss of 3 cents per share.

Quarterly revenues were $0.13 million, slightly beating the Zacks Consensus Estimate of $0.1 million. Notably, the top line comprised royalty and license fee revenues received under various non-imetelstat license agreements. In the year-ago quarter, revenues totaled $0.17 million. The top line declined as the number of active license agreements fell due to the expiry of patents of Geron’s underlying technology.

R&D expenses were $11.1 million compared with $2.7 million in the year-ago quarter. Transition costs, including resuming sponsorship of imetelstat clinical studies from J&J, costs related to the start-up of phase III portion of the IMerge study and expansion of development team, resulted in significantly higher R&D expenses.

General and administrative expenses rose 16.3% to $5 million, reflecting legal costs related to patent litigations and recruitment expenses for additional headcounts.

Geron ended the third quarter with $159.3 million in cash and investments compared with $162.3 million at the end of the second quarter.

2019 Guidance Maintained

Geron reiterated the outlook for 2019. The company expects operating expenses of $80-$85 million for the year. This includes one-time costs of $20-$25 million related to activities for transition of imetelstat from Janssen to Geron, and purchase of material for the phase III portion of IMerge study.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -30% due to these changes.

VGM Scores

At this time, Geron 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 lowest 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 this revision indicates a downward shift. Notably, Geron has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Geron Corporation (GERN) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research