Is a Beat in the Cards for ImmunoGen (IMGN) in Q4 Earnings?

We expect ImmunoGen, Inc. IMGN to beat estimates when it reports fourth-quarter 2017 results on Feb 9 before the market opens. Last quarter, the company delivered a negative earnings surprise of 32.14%.

ImmunoGen’s earnings performance has been a mixed bag. Of the last four quarters, the company surpassed expectations in two each, posted in-line results in one and missed estimates in another. Overall, ImmunoGen has an average positive surprise of 10.22%.

ImmunoGen’s shares have significantly outperformed the industry in a year’s time. The stock has skyrocketed 306.7% compared with the industry’s increase of 7.7% during the period.

 

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

Factors at Play

With no approved product in ImmunoGen’s portfolio, investors’ focus should remain on the company’s progress with its lead pipeline candidate, mirvetuximab soravtansine, and other programs.

ImmunoGen has recently made a significant advancement with regard to mirvetuximab soravtansine, currently in a phase III study (FORWARD I) as a single-agent therapy for treating patients with platinum-resistant ovarian cancer, whose tumors express high or medium levels of FR alpha.

Also, combination regimens with mirvetuximab soravtansine in ovarian cancer are in phase Ib/II FORWARD II study. The trial consists of cohorts assessing mirvetuximab soravtansine in combination with Roche's RHHBY Avastin and Merck's Keytruda. Initial data from the study demonstrated that the candidate has potential to complement all available therapies for the indication. Updated outcomes from the program are expected to be presented in the first half of 2018.

Mirvetuximab soravtansine apart, ImmunoGen is working to develop a couple of other candidates including IMGN779 and IMGN632. In December 2017, ImmunoGen released positive findings from the ongoing phase I study, evaluating IMGN779 on patients with relapsed or refractory adult acute myeloid leukemia (AML) at the annual meeting of American Society of Hematology. Earlier, this January, the company moved IMGN632 into clinical development to treat hematological malignancies including AML.

Notably, in its last earnings report, the company had significantly raised its cash guidance for 2017 due to execution of its agreement with Jazz in the third quarter for development and commercialization of IMGN779 and IMGN632. The company now anticipates cash and cash equivalents in the range of $260-$265 million compared with $90-$95 million, expected previously. An update on the outlook is awaited on the conference call.

Operating expenses are now projected in the range of $170-$175million for 2017 compared with $175-$180 million, forecast in the past.

What Our Model Indicates

Our proven model shows that ImmunoGen is likely to beat on earnings this quarter because it has the right combination of the two key ingredients. For a stock needs to have both a positive  Earnings ESP  and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.

Zacks ESP:  ImmunoGen has an Earnings ESP of +16.67%, representing the difference between the Most Accurate estimate (loss of 6 cents per share) and the Zacks Consensus Estimate (loss of 7 cents). A positive ESP indicates a likely earnings surprise.

You can uncover the best stocks to buy or sell before they’re reported with our  Earnings ESP Filter.

Zacks Rank:  ImmunoGen has a Zacks Rank #3, which increases the predictive power of ESP. Further, combined with a positive ESP, chances of an earnings beat are usually pegged higher.

We caution against all Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

ImmunoGen, Inc. Price and EPS Surprise

ImmunoGen, Inc. Price and EPS Surprise | ImmunoGen, Inc. Quote

 

Other Stocks to Consider

Here are some other health care stocks worth considering with the right combination of elements to beat on earnings this time around:

Exelixis, Inc. EXEL, which is expected to release fourth quarter results on Feb 26, has an Earnings ESP of +21.98% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alkermes plc ALKS is scheduled to release fourth quarter results on Feb 21. The company has an Earnings ESP of +34.12% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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