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Intercept (ICPT) to Post Q4 Earnings: What's in the Cards?

Zacks Equity Research

Intercept Pharmaceuticals, Inc. ICPT is scheduled to report fourth-quarter 2016 results on Feb 23, before the market opens.

In the last reported quarter, the company recorded a positive surprise of 3.49%. Let’s see how things are shaping up for this announcement.

Intercept’s share price movement in the last six months reveals that the stock has underperformed the Zacks classified Medical-Biomedical/Genetics industry. The company’s shares have lost 24.7% during this period, which compares unfavorably with the industry’s 7.4% fall.

Factors at Play

Intercept received a major boost with the FDA approval (in May 2016) of its lead drug, Ocaliva, in combination with ursodeoxycholic (UDCA), for the treatment of primary biliary cholangitis (PBC) in adults with an inadequate response to UDCA or as monotherapy in adults unable to bear with UDCA. Ocaliva generated sales of $4.7 million in the last quarter.

In the fourth quarter, the product should contribute substantially to the top line given the company’s efforts for marketing the drug. Intercept expects additional coverage decisions by the end of the year.

In Dec 2016, the European Commission granted conditional approval to Ocaliva for the same indication. Moreover, the company has filed a New Drug Submission to Health Canada for a marketing approval of Ocaliva, in combination with UDCA, for the treatment of PBC.

Meanwhile, Ocaliva is being evaluated for other indications including non-alcoholic steatohepatitis (NASH) and primary sclerosing cholangitis (PSC).

The company does not expect revenues from international markets until 2017. In its last conference call, the company revised its operating expenses guidance to the range of $320 million–$340 million, down from the previous guidance of $360 million–$400 million due to lower than expected clinical trials and delayed timing in raw material or OCA R&D manufacturing. Operating expenses in the fourth quarter are expected to increase marginally.

We expect investors to remain focused on the company’s performance, sales ramp-up of newly launched Ocaliva and pipeline updates on Intercept’s fourth-quarter call.

Intercept Pharmaceuticals, Inc. Price and EPS Surprise


Intercept Pharmaceuticals, Inc. Price and EPS Surprise | Intercept Pharmaceuticals, Inc. Quote

Surprise History

Intercept’s track record has been decent so far, with the company surpassing expectations in three of the last four quarters. The company has posted an average positive earnings surprise of 3.19% over this period.

What Our Model Indicates

Our proven model does not conclusively show that Intercept 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. However, that is not the case here, as you will see below.

Zacks ESP: The 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 current Zacks Consensus Estimate are pegged at a loss of $3.58. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Intercept carries a Zacks Rank #3. Although Intercept’s Zacks Rank #3 is favorable, the company’s 0.00% ESP makes surprise prediction difficult.

Concurrently, we caution against Sell-rated stocks (#4 or #5) going into the 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 they have the right combination of elements to post an earnings beat this quarter.

Pacira Pharmaceuticals, Inc. PCRX is expected to release results on Mar 1. The company has an Earnings ESP of +20% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for Exelixis, Inc. EXEL is +200% and it carries a Zacks Rank #2. The company is slated to release results on Feb 27.

Tesaro, Inc. TSRO has an Earnings ESP of +2.55% and a Zacks Rank #3. The company is scheduled to release results on Feb 28.

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