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It has been about a month since the last earnings report for Ligand Pharmaceuticals (LGND). Shares have lost about 14% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Ligand 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.
Ligand Beats on Q1 Earnings, Misses on Sales
Ligand reported first-quarter 2021 adjusted earnings of $1.41 per share, which significantly beat the Zacks Consensus Estimate of $1.05. The company had reported adjusted earnings of 89 cents in the year-ago quarter.
Total revenues were $55.2 million, up 60.2% from the year-ago quarter. The significant increase was mainly due to higher year over year Captisol revenues and contract revenues. However, the top line missed the Zacks Consensus Estimate of $65.35 million.
Royalty revenues were up 7.6% year over year to $7.1 million in the first quarter. Ligand primarily earns royalties on sales of Kyprolis and Acrotech Biopharma’s Evomela, which were developed using its Captisol technology. However, royalties were hurt as sales of Kyprolis were lower than expected due to COVID-19.
Captisol sales gained 48.3% year over year to $31.3 million. The increase was due to higher sales of Captisol to support availability of Gilead’s remdesivir. However, Captisol sales were down sequentially. Ligand stated that lower-than-expected Captisol revenues was due to loss of production in February at manufacturing sites in Southern United States owing to extreme cold weather.
Contract revenues were $16.68 million in the first quarter compared with $5.5 million a year ago.
Maintains 2021 Guidance
Ligand maintained its previously announced guidance for sales and earnings for 2021. It expects total revenues to be approximately $291 million and earnings to be $6.15 for the year.
However, the company stated that it may update total revenue guidance at any time during the year based on evolving demand for remdesivir.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
Currently, Ligand has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Ligand has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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