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Intercept Pharmaceuticals (ICPT): Will It Miss Q4 Earnings? - Analyst Blog

Anup Sadhu

Intercept Pharmaceuticals, Inc ICPT is slated to report its fourth-quarter 2014 results on Mar 2, 2015.

In the last quarter, the company missed earnings by 53.64%. Intercept’s track record has been mixed in the first nine months of 2014 with the company reporting an average surprise of 13.6% in the last four quarters. Let’s see how things are shaping up for this announcement.

Factors at Play in Q4

Intercept Pharma’s lead product candidate, obeticholic acid (OCA), is being developed for a variety of chronic liver diseases including primary biliary cirrhosis (PBC), non-alcoholic steatohepatitis (NASH) and primary sclerosing cholangitis (PSC).

Intercept Pharma’s most advanced development program for OCA is for PBC. The candidate is being developed as a second-line treatment for patients who respond inadequately or are intolerant to standard-of-care therapy. The company expects to file for the marketing approval of OCA for PBC in the U.S. and Europe during the first half of 2015. We note that OCA enjoys orphan drug designation in both the U.S. and Europe for the treatment of PBC and PSC.

The candidate was recently granted Breakthrough Therapy designation by the FDA for the treatment of NASH in patients suffering from liver fibrosis. Intercept Pharma was evaluating OCA for NASH in the FLINT trial, which was completed in Jul 2014. The company plans to initiate a phase III program for NASH in the first half of 2015, subject to review of the detailed data from the  FLINT trial and successful completion of the regulatory discussion.

Since the company does not have any other approved product in its kitty, we expect investor focus on updates on OCA and look forward to further updates from the company on its fourth-quarter call.

Earnings Whispers?

Our proven model does not conclusively show that Intercept Pharma is likely to beat earnings 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) for this to happen. This 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 currently pegged at -15.03%. This is because the Most Accurate estimate currently stands at a loss of 1.76 per share while the Zacks Consensus Estimate stands at a loss of $1.53 per share.

Zacks Rank: Intercept Pharma carries a Zacks Rank #3. Though a Zacks Ranks Rank #1, 2 or 3 increases the predictive power of an ESP, the company’s negative ESP makes a surprise prediction difficult.

However, we caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Amarin Corporation plc AMRN has an Earnings ESP of +14.29% and carries a Zacks Rank #2. The company is scheduled to release its fourth-quarter 2014 results on Mar 3.

Mylan MYL has an Earnings ESP of +2.89% and carries a Zacks Rank #3. It is expected to report its fourth-quarter results on Mar 2.

The Earnings ESP for Endo International plc ENDP is +0.89% and it carries a Zacks Rank #2. The company is scheduled to release its fourth-quarter results on Mar 2.

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