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Ionis (IONS) Q4 Earnings: What's in the Cards for the Stock?

Zacks Equity Research

Ionis Pharmaceuticals, Inc.IONS is scheduled to report fourth-quarter 2016 results on Feb 28. Last quarter, the company recorded a negative earnings surprise of 14.29%. Let’s see how things are shaping up for this announcement.

Ionis’share price decreased 1.9% year- to -date compared with the Zacks classified Medical-Drugs industry’s gain of 6.9%.

Factors to Consider

Ionis earns revenues in the form of upfront, milestone and other payments under its partnerships with leading health care companies like Biogen Inc. BIIB and Glaxo. These agreements also validate the company’s technology platform.

In Dec 2016, Ionis and Biogen received FDA approval for Spinraza (nusinersen), an antisense drug, for the treatment of spinal muscular atrophy (SMA). This makes it the first and only treatment to be approved in the U.S. for SMA, thus allowing it to tap a market with high potential. Though this is not expected to contribute to Ionis’ fourth-quarter sale, Spinraza is expected to be a revenue driver for Ionis in 2017.

Based on the approval of Spinraza, along with other accomplishments across all areas of its business, the company raised its 2016 financial guidance substantially in Jan 2017. Ionis expects to end 2016 with pro forma net operating income in the low to mid $20 million range. The company’s original guidance was of a pro forma net operating loss in the low $60 million range. The company said it generated more than $340 million in revenue in 2016, including more than $150 million in the fourth quarter.

At the fourth quarter conference call, we expect management to update on the commercialization and re-imbursement plans for Spinraza.

We expect the company to provide update on its rapidly progressing pipeline at the call.

Ionis and Akcea plan to report pivotal data from the phase III APPROACH study evaluating volanesorsen in patients with familial chylomicronemia syndrome in the first quarter of 2017.  Akcea is also planning to rapidly complete regulatory submissions for volanesorsen in the U.S., the E.U., and Canada upon positive data and expects to launch its first commercial drug.  In the second quarter of 2017, Ionis along with its partner GlaxoSmithKline is likely to announce phase III results from the NEURO-TTR study with IONIS-TTRRx in patients with familial amyloid polyneuropathy and expects to launch it soon.

Surprise History

Ionis’ track record has poor so far. Over the four trailing quarters, the company posted an average negative earnings surprise of 10.44%, having beaten estimates in one quarter and missed the same thrice.

Earnings Whispers

Our proven model does not conclusively show that Ionis is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to surpass estimates. 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 pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 20 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank:Though Ionis’ Zacks Rank #2 increases the predictive power of ESP, its 0.00% ESP makes surprise prediction difficult.

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

Ionis Pharmaceuticals, Inc. Price and EPS Surprise


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

A Stock to Consider

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

Exelixis, Inc. EXEL has an Earnings ESP of +200.0% and a Zacks Rank #2. The company is scheduled to release results on Feb 27. You can see the complete list of today’s Zacks #1 Rank stocks here.

Exact Sciences Corp. EXAS has an Earnings ESP of +5.00% and a Zacks Rank #2. The company is scheduled to release results on Feb 21.

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