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Why Is Aduro Biotech (ADRO) Down 12.1% Since Last Earnings Report?

Zacks Equity Research

It has been about a month since the last earnings report for Aduro Biotech (ADRO). Shares have lost about 12.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Aduro Biotech due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Aduro Earnings Miss in Q2, Revenues Meet Estimates

Aduro incurred second-quarter 2019 loss of 23 cents per share, wider than the Zacks Consensus Estimate of a loss of 16 cents but narrower than the year-ago loss of 31 cents.

Revenues in the reported quarter came in at $4.9 million, up 88.5% year over year, primarily owing to the ratable recognition of the upfront payment received from Eli Lilly during the first quarter of 2019. Sales almost came in line with the Zacks Consensus Estimate of $5 million.

Research and development expenses declined 12.9% in the reported quarter to $16.9 million owing to lower stock-based compensation and reduced headcount plus decreased costs for de-prioritized programs.

General and administrative expenses were $8 million, down 9.1% year over year, primarily owing to strategic reset announced in January, which resulted in lower stock-based compensation and reduced headcount.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 8% due to these changes.

VGM Scores

Currently, Aduro Biotech has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision has been net zero. Notably, Aduro Biotech has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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