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Why is Merrimack (MACK) Up 6.3% Since Its Last Earnings Report?

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Zacks Equity Research
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It has been about a month since the last earnings report for Merrimack Pharmaceuticals, Inc. MACK. Shares have added about 6.3% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is MACK 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.

Merrimack’s Q1 Loss Wider Than Expected

Merrimack reported a loss of $1.33 per share for the first quarter of 2018, which was wider than the Zacks Consensus Estimate of a loss of $1.28. The company had reported a loss of $2.20 in the year-ago quarter.

We remind investors that Merrimack sold its sole marketed drug, Onivyde, and a generic version of Doxil to Ipsen in April 2017. Merrimack did not generate any revenues in the quarter as it has no marketed product.

In the quarter, research and development expenses were down 39.4% year over year to $13.1 million due to Merrimack's refocused clinical and preclinical pipeline.

General and administrative expenses were down 23.2% year over year to $4.3 million due to reduced headcount levels.

Outlook

Per the company, cash and cash equivalents of $76.3 million as of Mar 31, 2018 and anticipated net milestone payments from Shire will be sufficient to fund its planned operations into the second half of 2019.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.

Merrimack Pharmaceuticals, Inc. Price and Consensus

 

Merrimack Pharmaceuticals, Inc. Price and Consensus | Merrimack Pharmaceuticals, Inc. Quote

VGM Scores

At this time, MACK has an average Growth Score of C, though it is lagging a bit on the momentum front with a D. The stock was also allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for growth based on our styles scores.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of this revision indicates a downward shift. Notably, MACK has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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