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What's in Store for GW Pharma (GWPH) This Earnings Season?

GW Pharmaceuticals plc GWPH is scheduled to report fourth-quarter 2018 results on Nov 27 after market close.

The company’s earnings history has been dismal so far, having missed expectations in three quarters while surpassing in one with an average miss of 9.69%. In the last reported quarter, GW Pharmaceuticals, however, came up with a positive surprise of 47.50%.

Shares of GW Pharmaceuticals have lost 5% so far this year, wider than the industry’s decrease of 2.1%.

Let’s see, how things are shaping up for this quarter to be reported.

Factors to Consider

GW Pharmaceuticals derives revenues from the sale of its sole commercial drug, Sativex, which is marketed outside the United States for the treatment of spasticity due to multiple sclerosis (MS). The company is planning to conduct a pivotal study for approval of the drug in the United States.

In June, the FDA approved its lead cannabinoid pipeline candidate, Epidiolex oral solution, for the treatment of Lennox-Gastaut syndrome (LGS) and Dravet syndrome. The candidate is under review in Europe with decision expected in the first quarter of 2019.

Earlier this month, the drug was made available in the United States by physician prescription. This makes it the first plant-derived cannabinoid prescription medicine.

However, no sales from the drug should be recorded in the to-be-reported quarter. On the conference call, the company should provide an update on the commercialization plans for the product and also update on its label expansion studies.

A phase III study evaluating Epidiolex for tuberous sclerosis complex (TSC) is under way with data expected in the first half of 2019. Another phase III study evaluating Epidiolex for Dravet syndrome is also ongoing. Additionally, the company is also working toward label expansion of Epidiolex for indications beyond epilepsy to autism.

Moreover, GW Pharmaceuticals is evaluating Epidiolex for the treatment of Infantile Spasms (IS), a type of seizure seen in an epilepsy syndrome during infancy or childhood known as West syndrome. The company is also developing several new formulations for the drug.

Earnings Whispers

Our proven model does not conclusively show that GW Pharmaceuticals is likely to beat estimates this to-be-reported quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat on earnings. That is not the case here as you will see below.

Earnings ESP: GW Pharmaceuticals has an Earnings ESP of -2.45%, representing the percentage difference between the Most Accurate Estimate of a loss of $2.54 per share and the Zacks Consensus Estimate pegged at a loss of $2.48. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: GW Pharmaceuticals sports a Zacks Rank of 1, which increases the predictive power of ESP. However, with a negative ESP, the combination leaves surprise prediction inconclusive.

We caution against Sell-rated stocks (4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

GW Pharmaceuticals PLC Price and EPS Surprise

GW Pharmaceuticals PLC Price and EPS Surprise | GW Pharmaceuticals PLC Quote

Stocks That Warrant a Look

Here are some health care stocks that you may want to consider as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.

MacroGenics, Inc. MGNX is expected to report fourth-quarter results on Feb 26, 2019. It has a Zacks Rank #2 and an Earnings ESP of +3.27%. You can see the complete list of today’s Zacks #1 Rank stocks here.

TG Therapeutics, Inc. TGTX has an Earnings ESP of +2.48% and a Zacks Rank of 2. The company is expected to report fourth-quarter results on Mar 14, 2019.

Insulet Corporation PODD is expected to report fourth-quarter results on Feb 20, 2019. It has an Earnings ESP of +1.01% and a Zacks Rank #3.

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