Ligand (LGND) Down 8.8% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Ligand Pharmaceuticals (LGND). Shares have lost about 8.8% 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.
Q2 Earnings Beat, Sales Miss Estimates
Ligand
reported adjusted diluted earnings of $1.42 per share in second-quarter 2023 from continuing operations, beating the Zacks Consensus Estimate of 76 cents. The company reported adjusted earnings of 43 cents in the year-ago quarter.
Total revenues of $26.4 million were down 47% from the year-ago quarter’s levels. The downside was due to the absence of COVID-19-related Captisol sales during the quarter. Revenues missed the Zacks Consensus Estimate of $28 million.
Quarterly Highlights
Royalty revenues were up 15% year over year to $20.4 million in the second quarter. The upside was mainly driven by increased royalties from Amgen’s Kyprolis, Jazz Pharmaceuticals’ Rylaze and Merck’s Vaxneuvance.
Total Captisol sales were down 82% year over year to $5.2 million in the reported quarter. Ligand reports its Captisol sales separately for core assets and COVID-related sales. Core Captisol sales rose 57% to $5.2 million due to the favorable timing of customer orders. During the quarter, the company did not record any Captisol sales related to COVID-19.
Contract revenues were down 74% year over year to $0.7 million in the second quarter, owing to the unfavorable timing of partner milestone events.
Cash, cash equivalents and short-term investments amounted to $219.0 million as of Jun 30, 2023, compared with $282.7 million as of Mar 31, 2023.
2023 Guidance
Ligand revised its guidance for 2023. The company reaffirmed its total revenue guidance of $124-$128 million.
Royalty revenues expectations remained unchanged in the $78-$82 million range. The company now expects Captisol sales to generate $24 million (previously: $21 million), while contract revenue is expected to be $22 million (previously: $25 million).
The company also increased its expectation for adjusted diluted EPS to $4.85-$5.00, which was expected in the range of $4.60-$4.75. This increased EPS guidance is due to gains from Viking Therapeutics stock sales.
The above guidance excludes Captisol sales related to COVID-19 and its impact on gross profit. Management will update investors as and when orders for COVID-19-related products are received.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -50.81% due to these changes.
VGM Scores
At this time, Ligand has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions 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.
Performance of an Industry Player
Ligand is part of the Zacks Medical - Biomedical and Genetics industry. Over the past month, Editas Medicine (EDIT), a stock from the same industry, has gained 3.2%. The company reported its results for the quarter ended June 2023 more than a month ago.
Editas reported revenues of $2.89 million in the last reported quarter, representing a year-over-year change of -54.6%. EPS of -$0.56 for the same period compares with -$0.78 a year ago.
For the current quarter, Editas is expected to post a loss of $0.64 per share, indicating a change of +21% from the year-ago quarter. The Zacks Consensus Estimate has changed -1% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Editas. Also, the stock has a VGM Score of D.
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Ligand Pharmaceuticals Incorporated (LGND) : Free Stock Analysis Report
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