It has been about a month since the last earnings report for Geron (GERN). Shares have added about 21.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Geron due for a pullback? 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.
Geron’s Q2 Earnings & Sales Miss Estimates
Geron incurred a loss of 8 cents per share in second-quarter 2019, wider than the Zacks Consensus Estimate of a loss of 6 cents. In the year-ago quarter, the company had incurred a loss of 4 cents per share.
Quarterly revenues in the quarter came in at $0.1 million, which missed the Zacks Consensus Estimate of $0.2 million. Notably, the top line comprised royalty and license fee revenues received under various non-imetelstat license agreements. In the year-ago quarter, revenues totaled $0.21 million. Revenues decreased as the number of active license agreements declined due to expiry of patents of Geron’s underlying technology.
Research and development (R&D) expense were up 215% year over year to $10.1 million. Transition costs, including resuming sponsorship of imetelstat clinical studies from J&J, costs related to start-up of phase III portion of the IMerge study (evaluating imetelstat in myelodysplastic syndromes) and expansion of development team, resulted in the significant increase in R&D expenses.
General and administrative (G&A) expenses rose 23.8% to $5.2 million, reflecting legal costs related to patent litigations and recruitment expenses for additional headcounts.
Geron ended the second quarter with $162.3 million in cash and investments compared with $170 million at the end of the first quarter.
Geron anticipates its full-year operating expense to be in the range of $80-$85 million. This includes one-time cost of $20-$25 million related to activities for transition of imetelstat from Janssen to Geron and purchase of material for the phase III portion of IMerge study. Geron expects to end 2019 with approximately $100 million in cash and investments.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -100% due to these changes.
At this time, Geron has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth 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.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Geron has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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