How Wall Street Feels about Alexion’s 1Q16 Earnings

Alexion Disappointed in 1Q16, but What's that Mean for Investors?

Revenue in 1Q16

Alexion Pharmaceuticals (ALXN), a biotechnology company based in Cheshire, Connecticut, reported its 1Q16 earnings on April 29, 2016. Alexion reported sales amounting to $701 million in the first quarter of 2016. Wall Street analysts were expecting the company to record $711.9 million during the period. The company’s revenue during the period 1Q16 grew by ~16.8% on YoY (year-over-year) basis.

Alexion’s pillar for the success was Soliris, which earned $664.7 million during the first quarter of 2016. Soliris witnessed an 11% jump in revenues during the period. Two other commercialized drugs, Strensiq and Kanuma, are in the initial phases of being launched. Strensiq earned $33.2 million while Kanuma recorded revenues amounting $2.5 million during 1Q16.

Alexion’s negative earnings surprise in 1Q16

During 1Q16, Alexion reported the non-GAAP (generally accepted accounting principles) diluted EPS (earnings per share) to be $1.11. Wall Street expected the earnings to be $1.14. Alexion’s EPS in 1Q16 was 13.3% lower than the 1Q15 EPS. Higher income tax provision was the major reason for such a margin contraction.

Beyond fiscal 2016, Alexion plans to boost its bottom line by growing Soliris as well as through the rising contribution from Strensiq and Kanuma.

To avoid the risks of investing directly in biotech companies, investors can choose the iShares Core S&P 500 ETF (IVV). IVV holds 7.8% of its assets in pharmaceutical companies, with 1.71% and 1.1% of its total weight in Johnson & Johnson (JNJ) and Pfizer (PFE), respectively. Merck & Company (MRK) holds 0.84% of the fund’s total assets, whereas Alexion’s share in IVV’s total holdings is 0.17%.

For understanding Alexion’s unique, ultra-rare-disease-focused business model, you might be interested in “What Defines Alexion’s Business Strategy?” But first, let’s see how Alexion’s share price has performed since its last earnings release.

Continue to Next Part

Browse this series on Market Realist:

• Part 2 - Understanding Alexion’s Share Price Performance since Its Previous Earnings

• Part 3 - Inside Soliris’s Continued Growth Momentum

• Part 4 - Inside Alexion’s Metabolic Drugs Kanuma and Strensiq