Why Is Nektar (NKTR) Down 37.1% Since Last Earnings Report?
It has been about a month since the last earnings report for Nektar Therapeutics (NKTR). Shares have lost about 37.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Nektar due for a breakout? 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 drivers.
Nektar Q2 Loss Narrows, Sales Miss Estimates
Nektar reported a loss of 27 cents per share for the second quarter of 2023, which was narrower than the Zacks Consensus Estimate of a loss of 30 cents. In the year-ago quarter, the company reported a loss of 85 cents per share.
Quarterly revenues declined 5% year over year to $20.5 million. The top line missed the Zacks Consensus Estimate of $20.9 million.
Quarter in Detail
In the second quarter, product sales declined 12.3% from the year-ago quarter’s level to $4.7 million. Product revenues beat our model estimate of $3.6 million.
Non-cash royalty revenues totaled $15.8 million, down 2.7% from the year-ago quarter’s figure. The figure was slightly better than our model estimate of $15.5 million.
License, collaboration and other revenues were negligible in the quarter.
Research and development expenses declined 30.4% to $29.7 million due to the winding down of the development of bempeg.
General and administrative expenses declined 12.7% year over year to $17.9 million due to the discontinuation of the development of bempeg.
Cash and investments in marketable securities as of Jun 30, 2023, amounted to $409.4 million compared with $457 million as of Mar 31, 2023.
2023 Guidance Maintained
In 2023, Nektar expects revenues to be between $80 million and $90 million, which includes $65-$70 million in non-cash royalties and $15-$20 million in product sales.
R&D costs are expected to range between $105 million and $115 million, while G&A costs are expected to be in the $75-$80 million range. Nektar expects to end 2023 with at least $315 million in cash and investments.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 15.9% due to these changes.
VGM Scores
Currently, Nektar has a strong Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the fifth 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 upward for the stock, and the magnitude of these revisions looks promising. Notably, Nektar 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
Nektar belongs to the Zacks Medical - Drugs industry. Another stock from the same industry, ImmunoGen (IMGN), has gained 8.4% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.
ImmunoGen reported revenues of $83.15 million in the last reported quarter, representing a year-over-year change of +487.2%. EPS of -$0.02 for the same period compares with -$0.24 a year ago.
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