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Shire (SHPG) to Report Q4 Earnings: What’s in the Cards?


Shire plc SHPG is scheduled to report its fourth-quarter 2017 results on Feb 14, before the market opens.

Shire’s track record has been impressive so far. The company delivered positive earnings surprises in each of the last four quarters, with the average being 6.69%. In the last reported quarter, Shire came up with a positive surprise of 4.67%.

Shire’s shares have decreased 25.3% in the past year, underperforming the industry’s decline of 1.9%.

Let’s see how things are shaping up for this quarter.

Factors at Play

Shire’s marketed products group consists of five business lines, which focus on commercial delivery – Rare Diseases, Neuroscience, Gastrointestinal (“GI”), Internal Medicine and Ophthalmics.

Revenues are mainly driven by growth in genetic disease portfolio, immunology and neuroscience franchise, which is expected to continue.

The company launched its new attention deficit hyperactivity disorder drug, Mydayis, late in August 2017. Although sales of the drug did not meet expectations in the third quarter, its performance remains to be seen in a full quarter since its launch.

In October, Shire’s hereditary angioedema (“HAE”) drug, Firazyr, received approval for label expansion in pediatric patients in Europe. The drug registered impressive growth in the third quarter. The broadening of patient population, following the label expansion is expected to positively impact fourth quarter’s results. However, decline in another HAE drug, Cinryze, may offset Firazyr’s favorable impact on the top line.

During the quarter, a new formulation, lyophilized Oncaspar, received approval in Europe. Oncaspar is approved for treating acute lymphoblastic leukemia (“ALL”). The new formulation has the same dosing regimen and similar efficacy compared to liquid Oncaspar. However, it increases the shelf life of the drug, thereby improving the supply of this critical drug. Moreover, the new formulation will improve the accessibility of the drug to ALL patients in countries where the liquid form is not allowed. This may reduce some costs related to the drug’s supply and storage while boosting sales with expanded geography.

There are a few regulatory actions anticipated this year for the company’s pipeline candidates especially potential approval of lifitegrast in Europe and NDA filing of HAE candidate, SHP643. Investors are expected to remain focused on updates on these products on the earnings call,

What Our Model Indicates

Our proven model does not conclusively show that Shire is likely to beat on earnings this quarter. A stock needs to have both a positive Earnings ESP and a 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: Earnings ESP, which represents the difference between the Most Accurate estimate (earnings of $3.82) and the Zacks Consensus Estimate (earnings of $3.86), stands at -1.05%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Shire’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Shire PLC Price and Consensus

Shire PLC Price and Consensus | Shire PLC Quote

Stocks That Warrant a Look

Here are some biotech 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.

Alkermes PLC ALKS is scheduled to release its results on Feb 14. The company has an Earnings ESP of +3.53% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Anthera Pharmaceuticals ANTH is expected to release its results on Feb 26. The company has an Earnings ESP of +20.47% and a Zacks Rank #3.

Exelixis EXEL, which is scheduled to release results on Feb 26, has an Earnings ESP of +10.64% and a Zacks Rank #2.

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