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What's in the Cards for Amarin (AMRN) This Earnings Season?

Zacks Equity Research

Investors are likely to remain focused on the progress of Amarin Corporation PLC’s AMRN sole marketed drug, Vascepa, when the company reports its first-quarter 2019 earnings.

Amarin’s earnings performance in the last four quarters was rather unimpressive, with the company missing estimates twice, meeting the same on one occasion and beating the same on the other, delivering average negative surprise of 17.92%.

However, shares of Amarin have outperformed the industry in the year so far. The stock has gained 35.2% compared with the industry’s increase of 2.2%.

In the last reported quarter, Amarin delivered a negative earnings surprise of 80%.

Let’s see how things are shaping up for this announcement.

Factors at Play

Amarin’s Vascepa is expected to drive sales in the first quarter, carrying on the momentum achieved in 2018 on the back of strong demand and an expanded sales force promoting awareness for the drug. The drug is approved as an adjunct to diet to reduce triglyceride levels in severe hypertriglyceridemia patients.

The company also earns fees from its licensed partners related to commercialization of Vascepa outside the United States. This is also expected to boost soon-to-be-reported quarter’s results.

Investors will primarily focus on the company’s expansion plan for Vascepa commercialization and its label expansion plans on its first-quarter earnings call.

Operating expenses are likely to remain high in the first quarter due to costs related to label expansion application and initiatives to promote awareness for the drug. The company expanded its sales force to support the label expansion of Vascepa, which is likely to hurt margins.

In March, Amarin presented updated data from its cardiovascular outcomes study of Vascepa, REDUCE-IT. Data from the study showed that relative risk of major adverse CV events was reduced by 30% upon treatment with Vascepa compared to placebo. The company filed label expansion application in end of March to include cardiovascular outcomes study data on the label of Vascepa.

Earnings Whispers

Our proven model does not conclusively show that Amarin is likely to beat estimates 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) to be able to beat estimates. But that is not the case here, as you will see below.

Earnings ESP: Amarin’s Earnings ESP is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at a loss of 6 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Although Amarin’s Zacks Rank #3 increases the predictive power of ESP, its 0.00% ESP makes surprise prediction difficult.

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

Amarin Corporation PLC Price and EPS Surprise


Amarin Corporation PLC Price and EPS Surprise | Amarin Corporation PLC Quote

Stocks That Warrant a Look

Here are some biotech stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases.

Aduro Biotech, Inc. ADRO has an Earnings ESP of +82.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Incyte Corporation INCY has an Earnings ESP of +14.47% and a Zacks Rank #2. The company is scheduled to release first-quarter results on Apr 30.

Gilead Sciences, Inc. GILD has an Earnings ESP of +1.37% and a Zacks Rank #2. The company is scheduled to release first-quarter results on May 2.

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Gilead Sciences, Inc. (GILD) : Free Stock Analysis Report
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