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Juno (JUNO) Q2 Earnings: Will the Stock Disappoint?

Arpita Dutt
Updated

Juno Therapeutics Inc. JUNO will be reporting second-quarter 2016 results on Aug 4, after the market closes. Juno, which started trading from Dec 2014, had delivered a negative earnings surprise of -17.91% in the last quarter. Let’s see how things are shaping up for this quarter.

Pipeline in Focus

With no approved products in its portfolio, Juno does not generate any product revenues. As a result, investor focus will be primarily on the company’s cash burn and pipeline updates.

Juno is looking to revolutionize cancer treatments by engaging the body’s immune system to treat cancer and is developing cell-based cancer immunotherapies based on CAR and high-affinity TCR technologies. This is a hot therapeutic area with huge commercial potential.

However, the company faced a major hiccup with the development of its lead pipeline candidate, JCAR015. Last month, the FDA had placed a clinical hold on the company’s phase II study (ROCKET) on JCAR015 in adult patients with relapsed or refractory B cell acute lymphoblastic leukemia (r/r ALL). The hold was placed after two patients died within a week due to severe neurotoxicity following the recent addition of fludarabine to the pre-conditioning regimen.

But the good news is that the clinical hold was lifted a week later and the study has resumed under a revised protocol.

We believe investor focus on the call will remain on updates regarding JCAR015, cash burn and revised timelines for filing for FDA approval of the candidate. Juno was previously looking to gain accelerated approval in the U.S. in 2017.

We note that at the time of releasing first-quarter results, Juno had said that it expects cash burn of $220 million - $250 million in 2016.

Juno has other interesting candidates in its pipeline as well as collaborations with companies like Celgene Corporation CELG for the global development and commercialization of immunotherapies.

Surprise History

Juno has a mixed record with the company posting negative surprises in two quarters and in-line results in the other two quarters. The average earnings surprise over the last four quarters is -5.95%.

JUNO THERAPEUTC Price and EPS Surprise

JUNO THERAPEUTC Price and EPS Surprise | JUNO THERAPEUTC Quote

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Earnings Whispers?

Our proven model does not conclusively show that Juno is likely to beat earnings 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) for this to happen. This is not the case here, as you will see below.

Zacks ESP: The Earnings ESP for Juno is -76.47%. This is because the Most Accurate estimate is a loss of 90 cents per share while the Zacks Consensus Estimate is a loss of 51 cents per share.

Zacks Rank: Juno carries a Zacks Rank #4 (Sell). Juno’s Zacks Rank #4 when combined with an ESP of -76.47% makes surprise prediction difficult.

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

Stocks to Consider

Here are some health care stocks you may want to consider as our model shows that they have the right combination of elements to post a beat this quarter.

The Earnings ESP for Raptor Pharmaceuticals Corp. RPTP is +11.11% and it carries a Zacks Rank #3. The company will be reporting second-quarter results on Aug 4.

Bio-Techne Corp. TECH has an Earnings ESP of +1.14% and carries a Zacks Rank #3. It is expected to report fourth-quarter fiscal 2016 results on Aug 4.

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BIO-TECHNE CP (TECH): Free Stock Analysis Report
 
CELGENE CORP (CELG): Free Stock Analysis Report
 
RAPTOR PHARMACT (RPTP): Free Stock Analysis Report
 
JUNO THERAPEUTC (JUNO): Free Stock Analysis Report
 
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