AVEO Pharmaceuticals (AVEO) Q1 Earnings: What's in Store?

AVEO Pharmaceuticals, Inc. AVEO is expected to report first-quarter 2018 results on May 3.

In the last reported quarter, AVEO delivered a negative surprise of 300%.

The company has slightly underperformed the industry so far this year. The stock fell 9.7% compared with a decline of 9.1% for the industry.

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

Factors at Play

Following its launch last year in Germany, Fotivda, a first-line treatment for patients with advanced renal cell carcinoma (“RCC”) became the first commercial product in AVEO’s portfolio. The company is entitled to receive double-digit royalty payments from its partner, EUSA Pharma on net sales of the drug in Europe. We expect it to boost the company’s first-quarter revenues. The Zacks Consensus Estimate stands at $1.65 million.

In February 2018, Fotivda was granted positive recommendation for approval in the United Kingdom for the treatment of patients with advanced RCC. The recommendation triggered a payment of $2 million from EUSA Pharma.

Fotivda is currently being evaluated in a couple of studies for the third-line treatment of RCC and advanced RCC. In December 2017, the company announced completion of enrollment in phase II portion of phase I/II TiNivo study, evaluating Fotivda in combination with Bristol-Myers’ BMY Opdivo in RCC. We expect the company to provide an update on these studies on its first-quarter earnings call.

Apart from Fotivda, AVEO is also developing ficlatuzumab in combination with Lilly’s Erbitux in a phase II study for treating metastatic head and neck squamous cell carcinoma. Another phase Ib study is evaluating the candidate in combination with Nab-paclitaxel and Gemcitabine in treatment-naive pancreatic cancer. These studies were initiated during the fourth quarter 2017.

Investor focus will likely remain on updates related to Fotivda’s launch and progress of ficlatuzumab.

Surprise History

AVEO’s performance over the last four quarters has been mixed. The company surpassed expectations thrice and missed once with an average negative surprise of 53.08%.

Earnings Whispers

Our proven model does not conclusively show that AVEO is likely to beat estimates in the soon-to-be reported 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) to be able to beat estimates. But that is not the case here, as you will see below.

Zacks ESP: Earnings ESP is 0.00% the Most Accurate estimate and the Zacks Consensus Estimate, are both pegged at a loss of 7 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: AVEO has a Zacks Rank #5 (Strong Sell).

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

AVEO Pharmaceuticals, Inc. Price and EPS Surprise

 

AVEO Pharmaceuticals, Inc. Price and EPS Surprise | AVEO Pharmaceuticals, 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 release.

Emergent Biosolutions Inc. EBS has an Earnings ESP of +61.8% and a Zacks Rank #2.  The company is scheduled to release first-quarter results on May 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Vanda Pharmaceuticals Inc. VNDA has an Earnings ESP of +25% and a Zacks Rank #2. The company is scheduled to release first-quarter results on May 2.

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