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Intersect ENT (XENT) Down 18.6% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

A month has gone by since the last earnings report for Intersect ENT (XENT). Shares have lost about 18.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Intersect ENT due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Intersect  Q2 Loss Wider Than Estimates, Revenues Miss

Intersect ENT reported second-quarter 2019 loss per share of 36 cents, wider than the Zacks Consensus Estimate of a loss of 34 cents. The reported loss was also a massive 157% wider than the year-ago loss of 14 cents.

Reported revenues in the second quarter grew 1.5% year over year to $26.7 million but missed the Zacks Consensus Estimate by 1.1%. The upside can be attributed to higher uptake of the SINUVA Sinus Implant. SINUVA accounted for around 4% of second-quarter 2019 revenues.

Margins

Cost of sales during the reported quarter was $5 million, down 9.2% year over year. Gross margin came in at 81.1%, reflecting a 221-basis point (bps) expansion year over year.

Selling, general and administrative expenses were up 31.4% to $27.6 million in the quarter under review. Research and development expenses were $6 million, up 38.1% year over year. The company reported operating loss of $12 million as compared with the year-ago operating loss of $4.6 million.

Cash Position

Intersect ENT exited the second quarter of 2019 with cash, cash equivalents and short-term investments of $93.5 million compared with $97.6 million at the end of the first quarter.

2019 Guidance

Intersect ENT slashed its 2019 revenue view to $108.5 million from the prior $113-$117 million. The Zacks Consensus Estimate for the metric is pegged at $114.7 million, which is above the provided guidance.

The company’s 2019 outlook for the gross margin has been reaffirmed at 80-81%.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -11.89% due to these changes.

VGM Scores

At this time, Intersect ENT has a poor Growth Score of F, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the fifth 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

Intersect ENT has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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