Why Is Ironwood (IRWD) Down 9.6% Since Last Earnings Report?
A month has gone by since the last earnings report for Ironwood Pharmaceuticals (IRWD). Shares have lost about 9.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Ironwood 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.
Reports Q2 Loss, Linzess Volume Rises
Ironwood reported second-quarter adjusted loss of $6.71 per share against earnings of 24 cents in the year-ago quarter. However, the reported figure included a one-time expense of approximately $1.1 billion pertaining to acquired in-process research and development (IPR&D) of VectivBio in the quarter.
Excluding the IPR&D cost, earnings were 31 cents per share, which beat the Zacks Consensus Estimate of 25 cents.
Total revenues of $107.8 million beat the Zacks Consensus Estimate of $103 million. The top line also increased 10.4% year over year.
Quarter in Detail
As reported by partner AbbVie, Ironwood’s sole marketed product, Linzess, generated net sales of almost $269.7 million in the United States, up 9% year over year driven by prescription growth. The total prescription and new prescription demand of Linzess increased 9% and 15%, respectively, from that recorded in the year-ago period.
Ironwood’s share of net profit from the sales of Linzess in the United States (included in collaborative revenues) was $104.8 million, up 11% year over year. Linzess’ collaborative revenues from U.S. sales beat our model estimate of $101.5 million.
The company recorded $2.6 million in royalties and other revenues, down 3.7% from the prior-year quarter’s figure.
Ironwood’s cash and cash equivalents totaled $175.3 million as of Jun 30, 2023, compared with $742 as of Mar 31, 2023.
2023 Guidance Update
Ironwood updated its previously issued guidance for 2023, reflecting continued strong performance of Linzess in the United States.
The company expects total revenues in the band of $435-$450 million, up from the previous guided range of $420-$435 million. It also anticipates U.S. sales of Linzess to grow in the band of 6-8%, up from the previous projection of 3-5%.
The company now expects adjusted EBITDA at a loss of approximately $900 million for the year (against the previously anticipated earnings of $250 million). The figure includes the abovementioned one-time charge of approximately $1.1 billion from the VectivBio acquisition.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -34.62% due to these changes.
VGM Scores
At this time, Ironwood has a great Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. 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, Ironwood has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Ironwood Pharmaceuticals, Inc. (IRWD) : Free Stock Analysis Report
