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What's in the Cards for Inovio (INO) This Earnings Season?

Zacks Equity Research
Updated

Inovio Pharmaceuticals, Inc. INO is expected to report fourth-quarter 2017 and full-year results later this month.

Shares of Inovio have underperformed the industry in a year’s time. The stock has lost 37.3% compared with the industry’s decrease of 4.1%.

 

Inovio’s earnings performance has been a mixed bag over the last four quarters. The company surpassed expectations on two occasions as well as lagged the same on the other two. Overall, it delivered an average miss of 16.97%.

Last quarter, the company fell short of the Zacks Consensus Estimate with a negative surprise of 73.91%. Let’s see, how things are shaping up for this announcement.

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Factors to Consider

Given that Inovio’s portfolio is devoid of any revenue-generating product, investors’ focus will remain on its pipeline as well as regulatory updates on the conference call.

VGX-3100 is the most advanced candidate in the company’s pipeline. It is being studied for treatment of HPV-16 and HPV-18 infection and pre-cancerous lesions of the cervix and vulva. Inovio conducts a pivotal phase III REVEAL program to evaluate the safety and efficacy of VGX-3100 for the treatment of cervical dysplasia caused by human papillomavirus (HPV). Data from the trial will likely support the potential licensure of VGX-3100 as the first immunotherapy for the said indication.

Apart from VGX-3100, Inovio has several candidates in its pipeline in early-to-mid-stage development. Also, the company is working to develop Ebola, Zika and Middle East respiratory syndrome virus vaccines. In October 2017, the company announced positive findings from phase I study, evaluating the Zika vaccine, GLS-5700.

Last November, the company initiated a phase Ib/IIa immuno-oncology study, evaluating the safety and efficacy of the combo therapy of Regeneron’s REGN PD-1 inhibitor, REGN2810, with its T cell activator, INO-5401, on patients with brain cancer. Earlier in October, Inovio also commenced a phase Ib/II immuno-oncology study, assessing INO-5401 in combination with Roche’s Tecentriq on patients with metastatic bladder cancer.

However, dearth of an approved product in the company’s portfolio makes Inovio largely dependent on collaborations, grants and other payments for revenues as well as for development of its pipeline candidates. Hence, the company’s top line varies on a quarterly basis, depending on the timing of receipt of collaboration revenues.

Earnings Whispers

Our proven model does not conclusively show that Inovio is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Zacks ESP: Inovio has an Earnings ESP of 0.00% because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 29 cents.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Inovio carries a Zacks Rank #3, which increases the predictive power of ESP. However, a company’s 0.00% ESP makes surprise prediction difficult.

We caution against the Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Inovio Pharmaceuticals, Inc. Price and EPS Surprise

Inovio Pharmaceuticals, Inc. Price and EPS Surprise | Inovio Pharmaceuticals, Inc. Quote

 

Stocks That Warrant a Look

Here are two health care stocks with the right combination of elements to surpass estimates this time around:

Gemphire Therapeutics GEMP is expected to release fourth-quarter 2017 results on Mar 21. The company has an Earnings ESP of +24.74% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

BioDelivery Sciences International, Inc. BDSI is expected to announce fourth-quarter financial numbers this month. The company has an Earnings ESP of +19.36% and a Zacks Rank of 3.

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Regeneron Pharmaceuticals, Inc. (REGN) : Free Stock Analysis Report
 
BioDelivery Sciences International, Inc. (BDSI) : Free Stock Analysis Report
 
Inovio Pharmaceuticals, Inc. (INO) : Free Stock Analysis Report
 
Gemphire Therapeutics Inc. (GEMP) : Free Stock Analysis Report
 
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