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Alkermes (ALKS) Up 4.4% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Alkermes (ALKS). Shares have added about 4.4% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Alkermes due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Alkermes’ Q3 Earnings Meet Estimates, Revenues Miss

Alkermes reported third-quarter 2022 adjusted earnings of 2 cents per share, in line with the Zacks Consensus Estimate. The adjusted earnings were higher than our estimate of 1 cent per share. The company reported adjusted earnings of 14 cents per share in the year-ago quarter.

Revenues of $252.4 million decreased 14.1% from the year-ago quarter. The top line missed the Zacks Consensus Estimate of $274.4 million. Total revenues were lower than our estimate of $274.2 million in the reported quarter.

Quarter in Detail

Total manufacturing and royalty revenues plunged 61.1% year over year to $52.9 million due to the partial termination of the license agreement related to sales of long-acting Invega products in the United States by Janssen, a subsidiary of J&J.

Manufacturing and royalty revenues from Vumerity declined 1.5% year over year to $26.3 million.

Sales of the proprietary drug Vivitrol (for alcohol and opioid dependence) increased around 9% year over year to $96.5 million, while the same for Aristada (for schizophrenia) increased almost 10% year over year to $75.7 million.

The newly approved medicine, Lybalvi (olanzapine and samidorphan), generated sales worth $27.1 million following its launch in October 2021. Sales of the drug increased 34.8% sequentially, primarily driven by growth in demand.

Research and development expenses were $100.4 million, down 4.7% year over year.

Selling, general and administrative expenses were $152.8 million, up 12.2% year over year.

As of Sep 30, 2022, Alkermes had cash and cash equivalents worth $747.1 million compared with $760 million on Jun 30, 2022. Total outstanding debt was $293.9 million as of Sep 30, 2022.

2022 Guidance

Alkermes tightened its total revenue guidance for 2022.

The company now expects revenues in the range of $1,070-$1,120 million compared with the previous expectation of $1,050-$1,120 million.

Alkermes narrowed the sales guidance for Vivitrol and Aristada.

Vivitrol’s net sales are now expected in the range of $370–$380 million compared with the earlier projection of $365–$385 million. Aristada’s net sales are now expected in the range of$300–$310 million compared with $295–$315 million expected earlier.

Alkermes raised the full-year sales guidance for Lybalvi. Lybalvi’s net sales are now expected in the range of $88–$95 million compared with the previous projection of $75–$90 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

The consensus estimate has shifted 15.48% due to these changes.

VGM Scores

At this time, Alkermes has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. 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, Alkermes has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Alkermes belongs to the Zacks Medical - Biomedical and Genetics industry. Another stock from the same industry, Bristol Myers Squibb (BMY), has gained 3.1% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.

Bristol Myers reported revenues of $11.22 billion in the last reported quarter, representing a year-over-year change of -3.5%. EPS of $1.99 for the same period compares with $2 a year ago.

For the current quarter, Bristol Myers is expected to post earnings of $1.73 per share, indicating a change of -5.5% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.7% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Bristol Myers. Also, the stock has a VGM Score of A.

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