Why Is Jazz (JAZZ) Up 0.4% Since Last Earnings Report?
A month has gone by since the last earnings report for Jazz Pharmaceuticals (JAZZ). Shares have added about 0.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Jazz due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Q2 Earnings and Sales Beat Estimates
Jazz Pharmaceuticals reported adjusted earnings of $4.51 per share in second-quarter 2023, beating the Zacks Consensus Estimate of $4.46. The reported figure rose 5% year over year.
Total revenues in the reported quarter rose 3% year over year to $957.3 million. The upside was driven by sales of Xywav, Epidiolex and Rylaze. Total revenues beat the Zacks Consensus Estimate of $952.4 million
Quarter in Detail
Net product sales increased 2% from the year-ago quarter’s levels to $947 million. The reported figure beat the Zacks Consensus Estimate and our model estimates of $940 million and $939 million, respectively.
Jazz recorded $5.5 million during the quarter as royalty revenues from high-sodium oxybate authorized generic (AG).
Other royalties and contract revenues rose 5% to $4.8 million in the quarter.
Neuroscience Products
Sales of Jazz’s neuroscience products dropped 1% to $691.4 million.
Net product sales for the combined oxybate business (Xyrem + Xywav) dropped 4% to $486.3 million in the quarter. During the quarter, average active oxybate patients fell 5% year over year to approximately 16,200. This combined revenue figure beat the Zacks Consensus Estimate and our model estimates of $485 million and $483 million, respectively.
Sales of the sleep disorder drug Xyrem plunged 41% year over year to $159.8 million due to patients switching to Xywav and the launch of an AG version of Xyrem this January. An AG version of the drug was also launched by Amneal Pharmaceuticals last month, with many more AG versions expected to follow.
Xywav recorded sales of $326.6 million in the quarter, up 39% year over year. The upside can be attributed to the encouraging uptake of the drug in narcolepsy and IH indications. The drug is currently Jazz’s most extensive product by net sales.
Sales of Epidiolex/Epidyolex rose 15% to $202.2 million. However, the drug’s sales missed the Zacks Consensus Estimate and our model estimates of $210 million and $211 million, respectively.
Sativex recorded sales of $2.8 million in the quarter, down 32% year over year.
Oncology Products
Oncology product sales increased 10% to $252.2 million.
Rylaze recorded sales of $101.7 million in the quarter, up 39% year over year. Jazz stated that demand remained strong during the quarter.Rylaze sales beat the Zacks Consensus Estimate and our model estimates of $84 million and $80 million, respectively.
Zepzelca recorded sales worth $70.3 million in the quarter, up 3% year over year. Per management, the drug continued as the treatment of choice in the second-line SCLC setting.
Vyxeos generated sales of $34.1 million, up 1% from the year-ago period’s levels.
Defitelio sales were down 16% year over year at $46.1 million in the quarter.
Cost Discussion
Adjusted selling, general and administrative (SG&A) expenses were down 2% year over year at $276.9 million.
Adjusted research and development (R&D) expenses rose 55% to $192 million, mainly due to the support for the increased costs of developing pipeline candidates.
2023 Guidance
Jazz revised its financial guidance for the full year 2023.
Management now expects 2023 adjusted earnings in the range of $18.15-$19.00 per share, up from the previous guidance of $16.90-$17.85.
Total revenues are now expected to be in the range of $3.73-$3.88 billion, a $50 million raise in the lower range of the previously provided guidance range of $3.68-$3.88 billion. The revised guidance suggests approximately 3% year-over-year growth at the midpoint compared with 2022 levels. In 2023, Jazz expects continued growth in net sales of Xywav, Epidiolex and its oncology portfolio.
Neuroscience sales are now expected to be $2.72-$2.83 billion (previous guidance: $2.68-$2.83 billion), implying flat year-over-year growth at the midpoint compared to 2022. The Oncology franchise is expected to record sales in the range of $0.95-$1.05 billion (unchanged), indicating growth of 14% at the midpoint compared with 2022 levels.
While adjusted SG&A expenses are anticipated between $1.05 billion and $1.11 billion (unchanged), adjusted R&D expenses are expected to be in the band of $675 million to $725 million (unchanged).
Based on the royalty structures within the AG agreements, the company expects to record significantly higher royalty revenue from high-sodium oxybate AG in second-half 2023 when compared to the first half.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 7% due to these changes.
VGM Scores
Currently, Jazz has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% 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 trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Jazz has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Jazz Pharmaceuticals PLC (JAZZ) : Free Stock Analysis Report
