Will Regeneron (REGN) Earnings Surprise on Eylea Sales? - Analyst Blog

Regeneron Pharmaceuticals, Inc. REGN is scheduled to release second-quarter 2015 financial results before the opening bell on Aug 4, 2015.

The company has recorded positive earnings surprises in one of the trailing four quarters with an average miss of 11.84%. Let’s see how things are shaping up for this announcement.

Eylea Holds the Key

Eye drug, Eylea is the key growth driver at Regeneron. Regeneron has co-developed Eylea with the HealthCare unit of Bayer BAYRY. Regeneron records the entire U.S. sales, while Regeneron and Bayer equally share the profits and losses from ex-U.S territories.

In the first quarter, U.S. sales of Eylea showed an improvement of 6.4% sequentially. In 2015, the company expects U.S. Eylea sales to grow 30–35% year over year.  We believe sales of the eye drug could improve going forward benefiting from the inclusion of diabetic retinopathy, diabetic macular edema and macular edema after branch retinal vein occlusion indications in its label.

Regeneron received a major boost when its PCSK9 inhibitor, Praluent, for the treatment of high LDL cholesterol in adults gained approval in the U.S. earlier this month. The cholesterol management market holds huge commercial potential and Praluent is expected to generate blockbuster sales.

What Our Model Indicates

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

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 38 cents per share.

Zacks Rank: Regeneron currently carries a Zacks Rank #2 (Buy). Although the company’s Zacks Rank #2 enhances the predictive power of the ESP, the company’s ESP of 0.00% makes a surprise prediction difficult.

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

Stocks That Warrant a Look

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

The Earnings ESP for Immune Design Corp. IMDZ is +20.41% and it carries a Zacks Rank #3. The company is expected to release results on Aug 13.

Momenta Pharmaceuticals Inc. MNTA has an Earnings ESP of + 74.36% and carries a Zacks Rank #3. The company is expected to release results on Aug 4.

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