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Why Is Jazz (JAZZ) Up 1.8% Since Last Earnings Report?

·4 min read

It has been about a month since the last earnings report for Jazz Pharmaceuticals (JAZZ). Shares have added about 1.8% 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 the most recent earnings report in order to get a better handle on the important catalysts.

Jazz Pharmaceuticals Q1 Earnings Beat, Sales Miss

Jazz Pharmaceuticals delivered adjusted earnings of $3.92 per share for the first quarter of 2021, beating the Zacks Consensus Estimate of $3.69. The company had reported earnings of 45 cents in the year-ago quarter.

Total revenues in the reported quarter rose 13.6% year over year to $607.6 million. However, sales missed the Zacks Consensus Estimate of $613.0 million.

Net product sales increased 13.8% from the year-ago quarter to $603.5 million driven mainly by recently launched products, Xywav and Zepzelca. Please note that 23% of Jazz’s net product sales in the quarter came from newly launched products.

Royalties and contract revenues declined 10.4% to $4.1 million in the quarter.

Neuroscience Products

Sales of neuroscience products increased 3% to $422.6 million driven by the launch of Xywav in November 2020.

Net product sales for the combined oxybate business (Xyrem + Xywav) increased 1% to $411.0 million in the first quarter of 2021.

Sales of Xyrem declined 18% year over year to $335.6 million due to patient switching to Xywav.

Xywav recorded sales of $75.4 million in the quarter compared with $15.3 million in the previous quarter.  At the end of the first quarter, Jazz had approximately 3,900 active Xywav patients. This is up from approximately 1,900 at the end of the year.

Another new drug, Sunosi recorded sales of $11.6 million in the quarter, higher than $8.7 million in the previous quarter driven by recent demand and growth trends.

Oncology Products

Oncology product sales increased 51% to $178.2 million driven by strong Zepzelca sales and higher Defitelio and Vyxeos sales.

Vyxeos generated sales of $33.2 million, up 1% from the year-ago period driven by ongoing commercial activities and expansion into new international markets.

Newly launched Zepzelca (lurbinectedin) recorded sales of $54.3 million in the first quarter compared with $53.4 million in the previous quarter.

The drug witnessed significant patient growth and uptake across both community and academic settings and in both platinum sensitive and platinum resistant SCLC patients.

Erwinaze/Erwinase revenues were $41.1 million, up 9% year over year.

Defitelio sales increased 5% to $49.6 million in the quarter.

Other product sales rose 10.3% to $2.8 million.

Cost Discussion

Adjusted selling, general and administrative (SG&A) expenses rose 21.6% to $228.4 million due to higher expenses for multiple product launches and expansion of the commercial operations.

Adjusted research and development (R&D) expenses declined 14.8% to $67.9 million due to lower expenses related to pipeline development.

2021 Guidance

The company maintained its financial guidance for 2021 for the standalone company, which does not include the impact of the pending GW Pharmaceuticals acquisition.

The company expects 2021 adjusted earnings in the range of $15.65-$16.85 per share.

Total revenues are expected to be in the range of $2.55-$2.70 billion, which indicates 11% increase at the midpoint over 2020 total revenues. Total product sales are anticipated in the range of $2.54-$2.69 billion.

Neuroscience sales are expected in the range of $1.79 billion to $1.89 billion. The Oncology franchise is expected to record sales of $715 million to $835 million.

While adjusted SG&A expenses are anticipated in the range of $905 million to $945 million, adjusted R&D expenses are expected to be in the band of $330 million to $370 million.

The company plans to provide 2021 financial guidance for the combined Jazz GW organization following the close of the transaction.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

VGM Scores

At this time, Jazz has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, 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 this revision indicates a downward shift. 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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