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Why Is Alkermes (ALKS) Down 3.9% Since Last Earnings Report?

Zacks Equity Research

It has been about a month since the last earnings report for Alkermes (ALKS). Shares have lost about 3.9% in that time frame, outperforming the S&P 500.

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

Alkermes Earnings and Sales Beat Estimates in Q2

Alkermes reported earnings of 9 cents per share in the second quarter of 2019, down from earnings of 29 cents in the year-ago quarter. However, earnings surpassed the Zacks Consensus Estimate of a loss of 10 cents.

The company’s revenues of $279.9 million in the quarter declined 8.1% from the year-ago quarter. The top line, nevertheless, beat the Zacks Consensus Estimate of $254 million. The company’s proprietary products — Vivitrol and Aristada — drove revenues. However, this was offset by declining sales of Ampyra, following the entry of generics into the market in 2018.

Factors Impacting Q2

Manufacturing and royalty revenues from Risperdal Consta, InvegaSustenna/Xeplion and InvegaTrinza/Trevicta were $91.9 million, up 7.9% year over year. The same from Ampyra/Fampyra were down 50.3% year over year to $9.8 million due to generic competition. Research and development revenues, primarily from the collaboration with Biogen for Vumerity (diroximel fumarate), were $14.3 million, down 21.9% year over year.

Vivitrol sales improved about 15.8% year over year to $88.2 million.

Aristada sales came in at $48.4 million, up 44.1% year over year.

Research and development (R&D) expenses were $104.4 million, down 2.2% year over year.

Selling, general and administrative (SG&A) expenses were $155.1 million, up 12.2% year over year.

2019 Outlook

Alkermes now expects Aristada net sales for 2019 to be $200-$210 million, down from its previous expectation of $210-$230 million. Alkermes anticipates this decline in expectation to be offset by increase in royalty and manufacturing revenues.

However, the company maintained its total revenue guidance for 2019 along with the guidance for Vivitrol and its profit outlook. The company expects total revenues of $1.14-$1.19 billion. The Zacks Consensus Estimate for 2019 revenues is $1.17 billion.

The company expects Vivitrol sales to be $330-$350 million. It anticipates R&D expenses to be $450-$480 million. Alkermes’ guidance for SG&A expenses is $590-$620 million.

The company expects earnings per share to be 25-43 cents. The Zacks Consensus Estimate for 2019 earnings is pegged at 34 cents.

Pipeline Update

The company expects a regulatory action from the FDA forVumerity to treat multiple sclerosis. It also intends to submit new drug application (NDA) for ALKS 3831 in both schizophrenia and bipolar I disorder, and the first efficacy data for ALKS 4230, before year-end.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -29.94% due to these changes.

VGM Scores

At this time, Alkermes has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

Outlook

Alkermes has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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