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What's in the Cards for Nektar (NKTR) This Earnings Season?

Zacks Equity Research
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Nektar Therapeutics NKTR is scheduled to report fourth-quarter and full-year 2018 results on Feb 28 after market close.

While the company surpassed expectations in two of the last four quarters, it missed the same once and met once, with the average beat being 15.07%.

In the last reported quarter, Nektar reported a positive earnings surprise of 12.5%.

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

Factors at Play

Nektar earns revenues from proprietary PEGylation material sales to partners, royalties on sales of partnered drugs like AstraZeneca’s Movantik and Shire’s Adynovate. Royalty revenues displayed an upward trend in the first three quarters of 2018 and the same is likely to continue in the fourth quarter. The Zacks Consensus Estimate for product sales and royalties was $19.35 million.

The company also earns through receipts related to license and collaboration agreements and non-cash royalty revenues. The Zacks Consensus Estimate for collaboration and other revenues is pegged at $2.8 million.

The company also has several candidates in its pipeline, which includes its lead candidate, Onzeald (pain management) and NKTR-214 (an immuno-stimulatory CD122-biased agonist). Nektar has collaborations with multiple drug companies to develop NKTR-214 in combination with their cancer candidates. During the quarter, the company signed a similar agreement with Pfizer PFE to evaluate NKTR-214 in combination with Bavencio and talazoparib or Xtandi. In September 2018, Nektar initiated a phase III study to evaluate NKTR-214 in combination with Bristol-Myers’ BMY Opdivo for treating first-line advanced melanoma patients.

Nektar’s analgesic candidate, NKTR-181, is under review with the FDA for treating chronic low back pain in patients new to any opioid therapy. A decision is expected in May this year. The company is in the process of creating a commercialization plan for the drug. We expect the company to provide details on commercialization plans following potential approval of NKTR-181. Investors should focus on any update on late-stage melanoma study on NKTR-214+Opdivo combination therapy and future development plans in other indications.

Earnings Whispers

Our proven model shows that the combination of a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: Nektar’s Earnings ESP is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at a loss of 70 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Although Nektar’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 (Sell) or 5 (Strong Sell) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

A Stock That Warrants a Look

Here is a stock from the pharma space 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.

BioDelivery Sciences International, Inc. BDSI has an Earnings ESP of +38.46% and a Zacks Rank #1. The company is scheduled to report results on Mar 14. You can see the complete list of today’s Zacks #1 Rank stocks here.

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