Why Is Halozyme Therapeutics (HALO) Up 5.3% Since Last Earnings Report?
A month has gone by since the last earnings report for Halozyme Therapeutics (HALO). Shares have added about 5.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Halozyme Therapeutics 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 drivers.
Halozyme Q4 Earnings Match Estimates, Revenues Lag
Halozyme delivered fourth-quarter 2023 adjusted earnings of 82 cents per share, which came in line with the Zacks Consensus Estimate. The company recorded earnings of 48 cents in the year-ago period.
Total revenues increased 27% year over year to $230 million in the fourth quarter. The top line was driven by higher product sales and continued growth in demand for Xyosted, and higher royalty payments from J&J for subcutaneous Darzalex and Roche’s Phesgo.
Revenues, however, missed the Zacks Consensus Estimate of $235 million.
Quarter in Detail
Halozyme’s top line comprises product sales, royalties and revenues under collaborative agreements.
Royalty revenues totaled $122.1 million in the fourth quarter, up 15% year over year. This was mainly due to robust demand for Darzalex and Phesgo. Royalty revenues accounted for nearly 53.1% of the company’s total revenues in the reported quarter. Royalty revenues missed our estimate of $125.6 million.
Product sales came in at $79.6 million, about 30.1% higher than the year-ago figure. Halozyme supplies API to ENHANZE partners contributing to product revenues as well as higher sales of the proprietary product Xyosted, which was acquired from Antares. Product sales beat our estimate of $70.3 million.
Revenues under collaborative agreements were $28.4 million, increasing almost 97.7% from the year-ago quarter’s level. Collaboration revenues missed our estimate of $45.6 million.
Adjusted EBITDA was $121.7 million in the fourth quarter, reflecting a 46.6% increase from the prior-year quarter.
Halozyme had cash, cash equivalents and marketable securities of $336 million as of Dec 31, 2023, compared with $483.3 million as of Sep 30, 2023.
2024 Guidance
Management expects total revenues in the range of $915-$985 million in 2024, implying growth of 10-19% from the year-ago levels.
Revenues from royalties are anticipated in the range of $500-$525 million.
Adjusted EBITDA is projeced in the range of $535-$585 million, implying growth of 26-37% from the prior-year levels.
The company forecasts adjusted earnings in the range of $3.55-$3.90 per share, indicating an improvement of 28-41% from a year ago. Halozyme’s earnings per share guidance does not consider the impact of potential future share repurchases.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -13.89% due to these changes.
VGM Scores
At this time, Halozyme Therapeutics has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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. Notably, Halozyme Therapeutics has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Halozyme Therapeutics belongs to the Zacks Medical - Biomedical and Genetics industry. Another stock from the same industry, Blueprint Medicines (BPMC), has gained 1.2% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Blueprint Medicines reported revenues of $71.96 million in the last reported quarter, representing a year-over-year change of +85.6%. EPS of -$1.82 for the same period compares with -$2.65 a year ago.
For the current quarter, Blueprint Medicines is expected to post a loss of $1.65 per share, indicating a change of +23.3% from the year-ago quarter. The Zacks Consensus Estimate has changed +1.6% over the last 30 days.
Blueprint Medicines has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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