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What's in the Cards for Amarin (AMRN) This Earnings Season?

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Amarin Corporation PLC (AMRN - Free Report) is scheduled to report third-quarter 2018 results on Nov 1, before market open.

Amarin’s earnings performance in the last four quarters was mixed, with the company missing expectations twice, meeting the same once and beating once, delivering an average negative surprise of 16.25%.

However, shares of Amarin have significantly outperformed the industry so far this time. The stock has rallied 447.6% against the industry’s decrease of 19.8%.

In the last reported quarter, Amarin delivered a negative earnings surprise of 25%.

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

Factors at Play

Amarin is a pharmaceutical company focused on developing innovating treatments for improving cardiovascular health. The company’s sole marketed drug, Vascepa, is approved as an adjunct to diet to reduce triglyceride levels in severe hypertriglyceridemia patients.

The drug showed strong sales growth in the first two quarters of 2018. Normalized prescriptions for the drug grew around 25% year over year in the same period. In July, Amarin received approval for Vascepa in the United Arab Emirates, which may boost sales growth further this quarter. The settlement of a patent litigation with Teva Pharmaceuticals (TEVA - Free Report) in May has delayed generic competition for the drug to August 2029.

The Zacks Consensus Estimate for drug sales stands at $61 million for the third quarter, suggesting rise of nearly 30% from the year-ago period.

The company also earns from its licensed partners related to commercialization of Vascepa outside the United States. The Zacks Consensus Estimate for license revenues is $200,000 this quarter.

In September, Amarin announced top-line data from its cardiovascular outcomes study of Vascepa, REDUCE-IT. Data from the study showed that relative risk was reduced by 25% upon treatment with Vascepa in patients with major adverse CV events compared to placebo.

Operating expenses for the company are on the rise due to REDUCE-IT study as it intends to to promote positive study data and expansion of the drug based on this data. The company is expanding its sales force to support the expansion. We expect operating expenses to remain high this quarter.

Investors will primarily focus on the company’s expansion plan for Vascepa commercialization on its third-quarter earnings call.

Earnings Whispers

Our proven model does not conclusively show that Amarin is likely to beat estimates this quarter. This 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 be able to beat estimates. But that is not the case here, as you will see below.

Earnings ESP: Amarin’s Earnings ESP is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at a loss of 9 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Although Amarin’s Zacks Rank #3 increases the predictive power of ESP, its 0.00% ESP makes surprise prediction difficult.

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.

Amarin Corporation PLC Price and EPS Surprise

 

Amarin Corporation PLC Price and EPS Surprise | Amarin Corporation 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.

Emergent Biosolutions Inc. (EBS - Free Report) has an Earnings ESP of +16.76% and a Zacks Rank #2.  The company is scheduled to release third-quarter results on Nov 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Compugen Ltd. (CGEN - Free Report) has an Earnings ESP of +58.33% and a Zacks Rank #2. The company is scheduled to release third-quarter results on Nov 7.

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