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Why Is Global Blood (GBT) Down 27.3% Since Last Earnings Report?

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It has been about a month since the last earnings report for Global Blood Therapeutics (GBT). Shares have lost about 27.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Global Blood 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 drivers.

Global Blood Q3 Loss Wider Than Expected, Sales Miss

Global Blood incurred a loss of 97 cents per share in third-quarter 2020, which was narrower than a loss of $1.07 in the year-ago quarter. However, the reported number was wider than the Zacks Consensus Estimate of a loss of 72 cents.

The company’s sales of $36.9 million, driven by Oxbryta, missed the Zacks Consensus Estimate of $45 million. The company did not generate product sales in the year-ago quarter.

Quarter in Details

Oxbryta net sales were $36.9 million in the third quarter of 2020. The company recorded more than 1,000 new prescriptions of Oxbryta in the quarter, despite an increase in COVID-19 cases in the United States during the third quarter.

Research and development expenses in the third quarter were $40.2 million, up from $39.1 million in the year-ago quarter, primarily attributable to increased external costs related to Global Blood’s inclacumab program and preclinical research activities related to the collaboration with Syros Pharmaceuticals, Inc.

Selling, general and administrative expenses were $54.5 million, up from $29.7 million in the year-ago quarter. The year-over-year increase in SG&A expenses was primarily attributable to higher employee-related costs, including non-cash stock compensation expenses; increased professional and consulting services associated with the build-out of the company’s commercial operations; and the launch of Oxbryta.

Pipeline Update

Global Blood announced an exclusive agreement with Biopharma-Middle East and Africa (Biopharma-MEA) to distribute Oxbryta in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, collectively known as the Gulf Cooperation Council (GCC) region. 

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -59.01% due to these changes.

VGM Scores

Currently, Global Blood 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Global Blood has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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