Investor focus will be on any update that Array BioPharma Inc. ARRY provides about its acquisition by Pfizer PFE when it reports fourth-quarter fiscal 2019 results. Please note that Pfizer had offered to acquire Array BioPhamra in June for $11.4 billion in cash.
The company’s earnings beat estimates in three of the past four quarters and met the same once with the average positive surprise being 32.67%.
Shares of Array BioPharma have surged 231.8% so far this year compared with the industry‘s increase of 0.4%.
In the last reported quarter, Array BioPharma delivered a positive earnings surprise of 19.05%.
Let’s see how things are shaping up for this announcement.
Factors at Play
Array BioPharma’s top line is primarily driven by its sole marketed therapy, a combination of Braftovi and Mektovi. In June 2018, the combination therapy was approved for treating unresectable or metastatic melanoma with a BRAF V600E or V600K mutation. The therapy has shown strong uptake, which is expected to continue in the soon-to-be reported quarter.
In February, the therapy was approved for a similar indication in Japan. This may bring additional revenues for the company in the to-be-reported quarter.
The company is evaluating the combination therapy in several clinical studies to support label expansions. In May, the company announced that Braftovi and Mektovi plus Lilly’s LLY Erbitux lowered the risk of death by 48% compared to Erbitux plus irinotecan-containing regimens in a phase III study. The study evaluated the triplet combination in BRAF V600E-mutant metastatic colorectal cancer (mCRC).
The ongoing clinical studies, commercial activities related to Braftovi-Mektovi combination therapy and preparation for a regulatory submission for label expansion in mCRC indication will likely increase operating expenses in the quarter.
Our proven model does not conclusively show that Array BioPharma 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: Array BioPharma’s Earnings ESP is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at a loss of 16 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Although Array BioPharma’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.
Array BioPharma Inc. Price and Consensus
Array BioPharma Inc. price-consensus-chart | Array BioPharma Inc. Quote
A Stock That Warrants a Look
Here is a biotech stocks 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 releases.
Gilead Sciences Inc. GILD has an Earnings ESP of +2.41% and a Zacks Rank #2. The company is scheduled to release second-quarter 2019 results on Jul 30. You can see the complete list of today’s Zacks #1 Rank stocks here.
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