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

Zacks Equity Research

Nektar Therapeutics NKTR is scheduled to report first-quarter 2019 results on May 8 after market close.

While the company surpassed the Zacks Consensus Estimate in two of the last four quarters, it missed the same once and matched it once, with a positive average beat of 3.92%.

Shares of the company have lost 0.6% so far this year against the industry’s increase of 10.1%.

In the last reported quarter, Nektar delivered a positive earnings surprise of 18.57%.

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 Takeda’s Adynovate. Royalty revenues displayed an upward trend in every quarter of 2018 and the momentum is likely to continue in the soon-to-be reported quarter.

The company will focus on its lead candidates, Onzeald (pain management) and NKTR-214 (an immuno-stimulatory CD122-biased agonist) on its first quarter earnings call. Nektar has collaborations with multiple drug companies to develop NKTR-214 in combination with their cancer candidates including Pfizer’s PFE Bavencio and talazoparib or Xtandi. A phase III study is evaluating NKTR-214 in combination with Bristol-Myers’ BMY Opdivo for treating first-line advanced melanoma patients. These studies are likely to drive research and development costs higher in the first quarter.

Nektar’s analgesic candidate, NKTR-181, is under FDA review for treating chronic low back pain in patients new to any opioid therapy. A decision is expected in August 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. Investor focus will be on updates 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 71 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.

Nektar Therapeutics Price and Consensus

 

Nektar Therapeutics Price and Consensus | Nektar Therapeutics Quote

A Stock That Warrants a Look

Here is a biotech stock that you may want to consider, as our model shows that it has the right combination of elements to post an earnings beat in its upcoming release.

Horizon Pharma HZNP has an Earnings ESP of +25.00% and a Zacks Rank #3. The company is scheduled to release first-quarter results on May 8. You can see the complete list of today’s Zacks #1 Rank stocks here.

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