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Why Is United Therapeutics (UTHR) Down 8.8% Since Last Earnings Report?

·3 min read

A month has gone by since the last earnings report for United Therapeutics (UTHR). Shares have lost about 8.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is United Therapeutics 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 drivers.

Q1 Earnings Miss, Sales Beat

United Therapeutics reported earnings of 61 cents per share for first-quarter 2021, which missed the Zacks Consensus Estimate of $2.60 per share. Earnings declined 80% year over year due to higher R&D costs in the quarter.

The abovementioned earnings include the impact of share-based compensation expenses, impairment charges, charges related to purchase of a priority review voucher and other items. Excluding these items, adjusted earnings were $3.49 per share, down 3% year over year.

Revenues for the reported quarter were $379.1 million, which beat the Zacks Consensus Estimate of $367.0 million. Revenues rose 6% year over year.

United Therapeutics markets four products for pulmonary arterial hypertension (PAH) — Remodulin, Tyvaso, Adcirca and Orenitram. Higher sales of Orenitram, Unituxin and Tyvaso offset lower sales of Remodulin and Adcirca.

Quarter in Detail

Orenitram sales amounted to $72.4 million in the reported quarter, up 5% year over year due to higher volumes resulting from patient growth, following an expanded Orenitram label, reflecting the FREEDOM-EV results.

Tyvaso sales totaled $123.0 million, up 20% year over year, gaining from higher volumes as a result of patient growth. Remodulin sales were $130.2 million, down 10% year over year due to decline in both the United States and international revenues.

Adcirca sales were $9.6 million, down 23% year over year due to generic erosion.

Unituxin’s (for the treatment of pediatric patients with high-risk neuroblastoma) sales of $43.9 million surged 65% year over year driven by volume growth.

Research and development (R&D) expenses were $303.7 million in the quarter, up 315% year over year due to $105 million paid to purchase a pediatric disease priority review voucher (PRV) and charges related to the decision to discontinue Trevyent development. Selling, general and administrative expense rose 26% to $117.2 million in the quarter.

How Have Estimates Been Moving Since Then?

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

VGM Scores

Currently, United Therapeutics has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second 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 downward for the stock, and the magnitude of these revisions looks promising. Notably, United Therapeutics has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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