What's in Store for Innoviva (INVA) This Earnings Season?

We expect royalties from Innoviva, Inc.’s INVA collaborated drugs to have driven revenues in first-quarter 2020.

Shares of the company have lost 6% so far this year.

Innoviva’s earnings performance has been dismal over the trailing four quarters. The company missed expectations in each of the last four quarters. The trailing four-quarter negative earnings surprise is 19.37%, on average.

In the last reported quarter, Innoviva delivered a negative earnings surprise of 30.0%.

Let’s see how things have shaped up prior to this announcement.

Factors at Play

Innoviva has a long-acting beta2 agonist (“LABA”) collaboration agreement with British pharma giant, Glaxo GSK, which is the sole revenue source for the former. Per this agreement, Innoviva records royalties on global sales of certain Glaxo’s Ellipta products — Relvar/Breo, Anoro and Trelegy.

Trelegy Ellipta, the most recent among these, demonstrated a strong growth trend in the in 2019. We expect strong demand for the drug to have continued in the first quarter, driving sales and in turn Innoviva’s royalties.

Moreover, sales of Anoro Ellipta were strong in the last two quarters of 2019, especially driven by ex-U.S. sales. The sales growth trend is likely to have continued in the soon-to-be-reported quarter.

However, the U.S. generic launch of Glaxo’s respiratory drug, Advair, in early 2019 negatively impacted pricing of Relvar/Breo Ellipta in the United States. We expect U.S. sales to have declined in the quarter. Meanwhile, growth in European markets and Japan are likely to have partially offset decline in U.S. sales of Relvar/Breo Ellipta.

We expect foreign currency translation to have negatively impacted ex-U.S. sales of these drugs, thus hurting royalties for Innoviva.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Innoviva this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Innoviva’s Earnings ESP is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at earnings of 43 cents.

Zacks Rank: Innoviva currently carries a Zacks Rank #2.

Innoviva, Inc. Price and Consensus

 

Innoviva, Inc. Price and Consensus

Innoviva, Inc. price-consensus-chart | Innoviva, Inc. 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 in their upcoming releases.

Allogene Therapeutics, Inc. ALLO has an Earnings ESP of +2.44% and a Zacks Rank #2. The company is scheduled to release first-quarter results on May 6. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alkermes plc ALKS has an Earnings ESP of +6.25% and a Zacks Rank #3. The company is scheduled to release first-quarter results on Apr 29.

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