Yahoo Finance Why Is Jazz (JAZZ) Down 3.5% Since Last Earnings Report?
A month has gone by since the last earnings report for Jazz Pharmaceuticals (JAZZ). Shares have lost about 3.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Jazz 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.
Q1 Earnings & Sales Miss Estimates
Jazz Pharmaceuticals reported adjusted earnings of $5.02 per share in fourth-quarter 2023, missing the Zacks Consensus Estimate of $5.26. In the year-ago period, the company reported an adjusted loss of 7 cents per share.
Total revenues in the reported quarter rose 4% year over year to $1.01 billion. Sales of Xywav, Epidiolex and Rylaze drove the upside. Total revenues were in line with the Zacks Consensus Estimate. Per management, this was the first time where the company achieved a billion dollars in quarterly sales.
Quarter in Detail
Net product sales fell 5% year over year at $842.1 million. The reported figure missed the Zacks Consensus Estimate and our model estimates of $895 million and $884 million, respectively.
Jazz recorded $49.9 million as royalty revenues from high-sodium oxybate authorized generic (AG), beating the Zacks Consensus Estimate of $44 million and our model estimate of $45 million.
Other royalties and contract revenues rose 53% to $9.9 million in the quarter.
Neuroscience Products
Sales of Jazz’s neuroscience products dropped 11% to $581 million.
Net product sales for the combined oxybate business (Xyrem + Xywav) fell 17% to $379.5 million in the quarter. This combined revenue figure missed the Zacks Consensus Estimate of $421 million and our model estimates of $420 million.
Sales of the sleep disorder drug Xyrem plunged 64% year over year to $64.2 million due to patients switching to Xywav and the launch of generics last year.
Xywav, a low-sodium formulation of Xyrem, recorded sales of $315.3 million in the quarter, up 14% year over year. The upside can be attributed to the encouraging uptake of the drug in narcolepsy and IH indications. The drug is currently Jazz’s most extensive product by net sales.
Sales of the epilepsy drug Epidiolex/Epidyolex rose 5% to $198.7 million. During the quarter, management stated that the drug’s growth was negatively affected by inventory drawdown in first-quarter 2024. Epidiolex sales missed the Zacks Consensus Estimate and our model estimates of $216 million and $209 million, respectively.
Cannabis-based mouth spray Sativex recorded sales of $2.7 million in the quarter, down 61% year over year.
Oncology Products
Oncology product sales increased 13% to $257.5 million.
Rylaze recorded sales of $102.8 million in the quarter, up 20% year over year, driven by strong demand for the drug.The drug’s sales beat the Zacks Consensus Estimate and our model estimates of $101 million and $92 million, respectively.
Zepzelca recorded sales worth $75.1 million in the quarter, up 12% year over year.
Vyxeos generated sales of $32.0 million, down 13% from the year-ago period’s levels.
Defitelio sales were up 22% year over year at $47.7 million in the quarter.
Cost Discussion
Adjusted selling, general and administrative (SG&A) expenses were up 20% year over year at $311.5 million due to higher compensation-related and litigation expenses incurred during the quarter.
Adjusted research and development (R&D) expenses rose 17% to $204.0 million, primarily to provide support for the increased costs of developing the company’s pipeline candidates.
2024 Guidance
Jazz issued its financial guidance for the full year 2024.
Total revenues are expected to be in the range of $4.0-$4.2 billion, suggesting approximately 7% year-over-year growth at the midpoint compared with 2023 levels. In 2024, Jazz expects continued growth in net sales of Xywav, Epidiolex, its oncology portfolio and royalties on net sales of AG.
Neuroscience sales are expected to be in the range of $2.80-$2.95 billion, suggesting 3.3% year-over-year growth at the midpoint compared with 2023 levels. Management also expects high-sodium oxybate AG royalty revenue to exceed $200 million in 2024. The Oncology franchise is expected to record sales in the range of $1.12-$1.22 billion, indicating growth of 15% at the midpoint from 2023 levels.
While adjusted SG&A expenses are anticipated to be between $1.17 billion and $1.23 billion, adjusted R&D expenses are expected to be in the band of $800-$850 million.
The company expects 2024 adjusted earnings in the range of $18.15-$19.35 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
Currently, Jazz has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. 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, Jazz has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Jazz Pharmaceuticals PLC (JAZZ) : Free Stock Analysis Report
