Is a Beat in the Cards for Incyte's (INCY) Q2 Earnings?

Incyte Corporation INCY is scheduled to release second-quarter 2020 results on Aug 4, before market open.

The company has a disappointing track record. In the last reported quarter, the company missed earnings estimates by 3675%. It missed earnings expectations in the last four quarters by 895.93%, on average.

Incyte Corporation Price, Consensus and EPS Surprise

 

Incyte Corporation price-consensus-eps-surprise-chart | Incyte Corporation Quote

Why A Likely Positive Surprise?

Our proven model predicts an earnings beat for Incyte this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP for Incyte is +4.62%, as the Zacks Consensus Estimate stands at 79 cents and the Most Accurate Estimate at 83 cents.

Zacks Rank: The company currently carries a Zacks Rank #3.

Factors Driving Growth

Incyte derives product revenues from sales of Jakafi in the United States and Iclusig in Europe. Patient demand for Incyte’s lead drug, Jakafi, a first-in-class JAK1/JAK2 inhibitor, in all three approved indications (polycythemiavera, myelofibrosis and the recent label expansion in steroid-refractory acute graft-versus-host disease [GVHD]) was strong in the previous quarter, a trend that most likely continued in the to-be-reported quarter. Jakafi sales grew 22% in the first quarter. The Zacks Consensus Estimate for Jakafi sales stands at $471 million.

The company also earns product royalty revenues from Novartis AG NVS for the commercialization of Jakafi in ex-U.S. markets. Novartis recorded 9% growth in sales in the second quarter and hence, Incyte might have received higher royalties for the same.

We remind investors that while Jakafi sales and royalties are key catalysts for the company’s revenue growth, Iclusig sales and Olumiant royalties from Eli Lilly also contribute to the top line. Hence, these are likely to have aided the company’s revenues in the to-be-reported quarter. Net product revenues of Iclusig amounted to $27.2 million in the first quarter and similar levels of contribution are likely to have been witnessed in the second quarter. The Zacks Consensus Estimate for Iclusig sales stands at $25.19 million.

In April, the FDA approved Incyte’s Pemazyre (pemigatinib), a kinase inhibitor indicated for the treatment of adults with previously treated, unresectable, locally advanced or metastatic cholangiocarcinoma. Investors will be keen on an update on the commercialization plans for the drug and incremental sales realized, if any.

Incyte stated in its first-quarter earnings call that although it is currently not possible to predict the overall long-term impact of the COVID-19 pandemic, there has been no impact on the commercial side of the business yet.

However, operating expenses have most likely increased in the second quarter as existing pipeline programs progress to later stages of development.

Key Pipeline Updates

In May, the FDA approved Tabrecta (capmatinib) for the treatment of adult patients with metastatic non-small cell lung cancer (NSCLC), whose tumors have a mutation that leads to MET exon 14 skipping (METex14) as detected by an FDA-approved test. Partner Novartis has exclusive worldwide development and commercialization rights to Tabrecta and the FDA approval of Tabrecta triggered $70 million in milestone payments from Novartis to Incyte.

Apart from the regular top and bottom-line numbers, we expect investors to focus on the company’s updates on the label expansion of Jakafi into additional indications.

Incyte initiated RUXCOVID, which is a global, randomized, double-blind, placebo-controlled phase III study evaluating the efficacy and safety of Jakafi plus standard-of-care (SoC) in patients aged 12 years and above with COVID-19-associated cytokine storm. The collaborative study is sponsored by Incyte in the United States and Novartis outside of the country.

Share Price Performance

Incyte’s stock has gained 17% in the year so far compared with the industry’s 5.1% growth.

Other Stocks to Consider

Here are a few other stocks you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this season.

Bristol-Myers Squibb BMY has an Earnings ESP of +0.23% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Translate Bio TBIO has an Earnings ESP of +7.69% and a Zacks Rank #2.

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Incyte Corporation (INCY) : Free Stock Analysis Report
 
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