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GW Pharmaceuticals (GWPH) Q3 Earnings: What Lies in Store?

Zacks Equity Research

GW Pharmaceuticals plc GWPH is scheduled to report fiscal third-quarter 2017 results on Aug 7 after-market hours.

GW Pharma’s share price has decreased 3.1% in the past six months, while the industry declined 12.6% in the same time frame.

Factors at Play

GW Pharma’s growth is solely dependent on Sativex, which is marketed outside the U.S. for the treatment of spasticity due to multiple sclerosis. The drug is expected to continue the growth trend of the past several quarters.

With just one approved product in its portfolio, at the upcoming earnings release, investor focus will be on Epidiolex and other pipeline updates.

GW Pharma has made significant progress with its lead cannabinoid pipeline candidate, Epidiolex. The candidate was granted orphan drug designation by the European Medicines Agency (EMA) for the treatment of Lennox-Gastaut syndrome (LGS) in the first quarter. The FDA also granted the candidate a conditional rare pediatric disease designation.

The company reported results from a phase III study in Apr 2017 showing that addition of Epidiolex to current treatments for LGS significantly reduced the frequency of drop seizures. In another phase III study Epidiolex significantly reduced monthly convulsive seizure frequency in children with Dravet syndrome.

The company plans to file for regulatory approval in the U.S. and EU for Epidiolex in LGS and Dravet Syndrome this year based on positive results in the aforementioned studies. The company is also making preparations for the launch of the candidate, which is expected to increase operational expenses.

The company‘s second candidate, GWP42006 (CBDV), is currently in a phase II clinical trial for epilepsy, with data expected in the last quarter of this fiscal year. The candidate has received orphan drug designation from the FDA for treating Rett syndrome. The company will likely commence an open label study of GWP42006 in patients with Rett syndrome in the fourth quarter with commencement of phase II development expected in the first quarter of the next fiscal year.

Surprise History

GW Pharma’s performance over the last four quarters has been rather positive, with the company surpassing expectations thrice and missing the same once. The average positive surprise over the last four quarters is 31.82%. However, the company missed estimates last quarter, resulting in a negative earnings surprise of 13.33%.

GW Pharmaceuticals PLC Price and EPS Surprise


GW Pharmaceuticals PLC Price and EPS Surprise | GW Pharmaceuticals PLC Quote

Earnings Whispers

Our proven model does not conclusively show that GW Pharma is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates. But that is not the case here, as you will see below.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of $1.73. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Although GW Pharma’s Zacks Rank #3 increases the predictive power of ESP, its 0.00% ESP makes surprise prediction difficult this quarter.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some health care stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.

Arena Pharmaceuticals, Inc. ARNA is expected to release results on Aug 14. The company has an Earnings ESP of +5.88% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Puma Biotechnology Inc. PBYI has an Earnings ESP of +3.33% and a Zacks Rank #3. The company is expected to release results on Aug 8.

Syndax Pharmaceuticals, Inc. SNDX has an Earnings ESP of +9.88% and a Zacks Rank #2. The company is expected to release results on Aug 8.

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GW Pharmaceuticals PLC (GWPH) : Free Stock Analysis Report
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