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Jazz (JAZZ) Down 3.7% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Jazz Pharmaceuticals (JAZZ - Free Report) . Shares have lost about 3.7% 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 catalysts.
Jazz Pharmaceuticals Beats on Q3 Earnings & Sales
Jazz Pharmaceuticals delivered adjusted earnings of $4.31 per share for the third quarter of 2020, which beat the Zacks Consensus Estimate of $4.03. Earnings rose 5.1% year over year driven by higher revenues.
Total revenues in the reported quarter rose 11.8% year over year to $600.9 million and beat the Zacks Consensus Estimate of $574 million.
Quarter in Detail
Net product sales increased 12.1% from the year-ago quarter to $597.0 million driven by continued strong performance of Xyrem, strong initial Zepzelca sales, and recovery in sales of Defitelio and Vyxeos. Royalties and contract revenues declined 26.8% to $3.9 million in the quarter.
Neuroscience Products
Sales of neuroscience products increased 7% to $456.9 million.
Sales of Xyrem, rose 5% year over year to $447.8 million. Sales were driven by 4% rise in bottle volume growth. The average number of active Xyrem patients increased 2%. New patient diagnoses and enrollments of Xyrem are being hurt due to COVID-19, a trend expected to continue during the pandemic. However, the negative trend improved somewhat in the third quarter from the second-quarter level.
Jazz’s newest drug Sunosi recorded sales of $9.1 million in the quarter, higher than $8.6 million in the previous quarter. U.S. prescriptions rose 7% from the previous quarter.
Oncology Products
Oncology product sales in the third quarter of 2020 increased 37% to $138.2 million.
Erwinaze/Erwinase (for acute lymphoblastic leukemia [“ALL”]) revenues were $20.1 million, down 41% year over year due to supply constraints.
Defitelio sales increased 34% to $50.2 million in the quarter due to recovery in hematopoietic stem cell transplants that had previously been postponed due to the COVID-19 pandemic.
Vyxeos generated sales of $30.8 million, up 4% from the year-ago period
Zepzelca (lurbinectedin) was approved by the FDA in June for the treatment of adult patients with metastatic small cell lung cancer (SCLC) with disease progression on or after platinum-based chemotherapy. The company launched the drug in the U.S. market in July. The drug recorded sales of $36.9 million in the third quarter.
Other product sales declined 58.2% to $1.87 million.
Cost Discussion
Adjusted selling, general and administrative (SG&A) expenses rose 17.6% to $186.2 million due to higher expenses for multiple product launches.
Adjusted research and development (R&D) expenses declined 3% to $71.1 million, as easy comparison with the year-ago quarter offset the impact of escalating expenses related to pipeline development. The year-ago quarter’s R&D costs included a milestone payment to Pfenex, which was missing in the third quarter of 2020
2020 Guidance
The company raised its financial guidance for 2020 based on strong performance of its drugs during the third quarter and the robust launch of Zepzelca,
The company expects 2020 earnings in the range of $12.20-$13.00 compared with the prior expectation of $11.90-$13.00. Total revenues are expected to be in the range of $2.32-$2.38 billion versus $2.23-$2.33 billion expected previously.
Total product sales are anticipated in the range of $2.30-$2.36 billion versus $2.21-$2.31 billion expected previously.
In neuroscience, Jazz raised the lower end of the guidance range. Neuroscience sales are expected in the range of $1.76 billion to $1.8 billion compared with the previous range of $1.73 billion to $1.8 billion. The Oncology franchise is expected to record sales of $525 million to $565 million, higher than the previous range of $445 million to $525 million, reflecting the robust launch of Zepzelca and improving trends for Defitelio and Vyxeos.
While adjusted SG&A expenses are anticipated in the range of $735 million to $765 million (previously $700 million to $750 million), adjusted R&D expenses are expected to be in the band of $275 million to $305 million (maintained).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Jazz has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile 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 downward 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 (JAZZ) Down 3.7% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Jazz Pharmaceuticals (JAZZ - Free Report) . Shares have lost about 3.7% 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 catalysts.
Jazz Pharmaceuticals Beats on Q3 Earnings & Sales
Jazz Pharmaceuticals delivered adjusted earnings of $4.31 per share for the third quarter of 2020, which beat the Zacks Consensus Estimate of $4.03. Earnings rose 5.1% year over year driven by higher revenues.
Total revenues in the reported quarter rose 11.8% year over year to $600.9 million and beat the Zacks Consensus Estimate of $574 million.
Quarter in Detail
Net product sales increased 12.1% from the year-ago quarter to $597.0 million driven by continued strong performance of Xyrem, strong initial Zepzelca sales, and recovery in sales of Defitelio and Vyxeos. Royalties and contract revenues declined 26.8% to $3.9 million in the quarter.
Neuroscience Products
Sales of neuroscience products increased 7% to $456.9 million.
Sales of Xyrem, rose 5% year over year to $447.8 million. Sales were driven by 4% rise in bottle volume growth. The average number of active Xyrem patients increased 2%. New patient diagnoses and enrollments of Xyrem are being hurt due to COVID-19, a trend expected to continue during the pandemic. However, the negative trend improved somewhat in the third quarter from the second-quarter level.
Jazz’s newest drug Sunosi recorded sales of $9.1 million in the quarter, higher than $8.6 million in the previous quarter. U.S. prescriptions rose 7% from the previous quarter.
Oncology Products
Oncology product sales in the third quarter of 2020 increased 37% to $138.2 million.
Erwinaze/Erwinase (for acute lymphoblastic leukemia [“ALL”]) revenues were $20.1 million, down 41% year over year due to supply constraints.
Defitelio sales increased 34% to $50.2 million in the quarter due to recovery in hematopoietic stem cell transplants that had previously been postponed due to the COVID-19 pandemic.
Vyxeos generated sales of $30.8 million, up 4% from the year-ago period
Zepzelca (lurbinectedin) was approved by the FDA in June for the treatment of adult patients with metastatic small cell lung cancer (SCLC) with disease progression on or after platinum-based chemotherapy. The company launched the drug in the U.S. market in July. The drug recorded sales of $36.9 million in the third quarter.
Other product sales declined 58.2% to $1.87 million.
Cost Discussion
Adjusted selling, general and administrative (SG&A) expenses rose 17.6% to $186.2 million due to higher expenses for multiple product launches.
Adjusted research and development (R&D) expenses declined 3% to $71.1 million, as easy comparison with the year-ago quarter offset the impact of escalating expenses related to pipeline development. The year-ago quarter’s R&D costs included a milestone payment to Pfenex, which was missing in the third quarter of 2020
2020 Guidance
The company raised its financial guidance for 2020 based on strong performance of its drugs during the third quarter and the robust launch of Zepzelca,
The company expects 2020 earnings in the range of $12.20-$13.00 compared with the prior expectation of $11.90-$13.00. Total revenues are expected to be in the range of $2.32-$2.38 billion versus $2.23-$2.33 billion expected previously.
Total product sales are anticipated in the range of $2.30-$2.36 billion versus $2.21-$2.31 billion expected previously.
In neuroscience, Jazz raised the lower end of the guidance range. Neuroscience sales are expected in the range of $1.76 billion to $1.8 billion compared with the previous range of $1.73 billion to $1.8 billion. The Oncology franchise is expected to record sales of $525 million to $565 million, higher than the previous range of $445 million to $525 million, reflecting the robust launch of Zepzelca and improving trends for Defitelio and Vyxeos.
While adjusted SG&A expenses are anticipated in the range of $735 million to $765 million (previously $700 million to $750 million), adjusted R&D expenses are expected to be in the band of $275 million to $305 million (maintained).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Jazz has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile 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 downward 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.