A month has gone by since the last earnings report for Halozyme Therapeutics (HALO). Shares have lost about 1.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Halozyme Therapeutics due for a breakout? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Halozyme Q2 Earnings & Revenues Miss Estimate
Halozyme reported second-quarter 2020 earnings of 19 cents per share, falling short of the Zacks Consensus Estimate of 25 cents. The company had reported a loss of 10 cents in the year-ago quarter.
Total revenues increased 41.2% year over year to $55.2 million primarily due to collaboration payments from Bristol-Myers and Janssen, a subsidiary of J&J. However, the top line missed the Zacks Consensus Estimate of $69.84 million.
Quarterly Highlights
Halozyme’s top line comprises product sales, royalties and revenues under collaborative agreements.
Royalty revenues were $15.8 million in the second quarter, down 12.5% from the year-ago quarter. The lower royalties resulted from a decline in sales of its partnered drugs due to biosimilar competition.
Product sales, solely from the sale of bulk rHuPH20 to collaborators using the ENHANZE platform for drug development, decreased 10% to $6.3 million in the second quarter.
Revenues under collaborative agreements were $33 million compared with $15.3 million in the prior-year quarter. The increase was due to recognition of $25 million milestone payment from Janssen related to the launch of and first commercial sale of the subcutaneous formulation of Darzalex in the United States and Europe.
Research and development (R&D) expenses declined 73.6% year over year to $9 million mainly due to discontinuation of oncology drug development efforts.
Selling, general and administrative (SG&A) expenses were $11 million, down 36.7% from the year-ago period. The decline was due to lower compensation and commercial-related expenses as a result of a restructuring initiatives announced last year.
2020 Guidance Maintained
Halozyme maintained its view for revenues and earnings in 2020. The company expects total revenues in 2020 to be between $230 million and $245 million, indicating year-over-year growth of 17-25%. It expects reported earnings to be in the range of 60-75 cents per share.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -13.64% due to these changes.
VGM Scores
Currently, Halozyme Therapeutics has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren’t focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Halozyme Therapeutics has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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