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Inovio (INO) Q3 Earnings: Is a Beat in Store for the Stock?

Zacks Equity Research
Updated

We expect Inovio Pharmaceuticals, Inc. INO to beat expectations when it reports third-quarter 2017 results on Nov 8, after market close.

Inovio’s shares have underperformed the industry so far this year. The stock has lost 16.9% versus the industry’s increase of 3.9% during the period.

Inovio’s earnings performance is a mixed bag. The company surpassed expectations in two of the last four quarters and missed in the other two. Overall, the company delivered an average negative surprise of 0.41% in the trailing four quarters.

Inovio Pharmaceuticals, Inc. Price and EPS Surprise

Inovio Pharmaceuticals, Inc. Price and EPS Surprise | Inovio Pharmaceuticals, Inc. Quote

Last quarter, the company beat estimates with a positive earnings surprise of 18.75%. Let’s see how things are shaping up for this announcement.

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Factors to Consider

Given that Inovio’s portfolio is devoid of any revenue-generating product, investors’ focus will remain on its pipeline and regulatory updates.

VGX-3100 vaccine is the most advanced candidate in the company’s pipeline. It is being studied for treatment of HPV-16 and HPV-18 infection and pre-cancerous lesions of the cervix and vulva. Inovio at present conducts a pivotal phase III REVEAL study to evaluate the safety and efficacy of VGX-3100 and treat cervical dysplasia caused by human papillomavirus (“HPV”). Data from the study will support the potential licensure of VGX-3100 as the first immunotherapy for this disease.

Apart from VGX-3100, Inovio has several other candidates in its pipeline in early-to-mid-stage development. Also, the company is working on the development of Ebola, Zika and Middle East respiratory syndrome virus vaccines. In October, the company announced positive data from phase I study, evaluating its Zika vaccine, GLS-5700.

Inovio is also collaborating with several companies and institutes for developing its pipeline. These partners not only lend their expertise to Inovio but also provide the required funding for developing its candidates.

This month, Inovio has initiated a phase Ib/IIa immuno-oncology study, evaluating the safety and efficacy of the combination therapy of Regeneron’s REGN PD-1 inhibitor, REGN2810, with Inovio’s T cell activator, INO-5401, on patients with brain cancer. Earlier in October, the company also initiated a phase Ib/II immuno-oncology study, evaluating INO-5401 in combination with Roche’s Tecentriq on patients with metastatic bladder cancer.

However, with dearth of an approved product in its portfolio, Inovio depends largely on collaborations, grants and other payments for revenues as well as development of its pipeline candidates. Hence, the company’s top line varies on a quarterly basis, depending on the timing of its receipt of collaboration revenues.

Earnings Whispers

Our proven model shows that Inovio is likely to beat on earnings this quarter because it has the right combination of the two key ingredients — a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.

Zacks ESP: Inovio has an Earnings ESP of +41.79%, representing the difference between the Most Accurate estimate (loss of 13 cents per share) and the Zacks Consensus Estimate (loss of 22 cents). A positive ESP indicates a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Inovio has a Zacks Rank #3, which increases the predictive power of ESP.

We caution against all Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks That Warrant a Look

A couple of other health care stocks worth considering with the right combination of elements to surpass estimates this quarter are:

Agenus Inc. AGEN is scheduled to release results on Nov 7. The company has an Earnings ESP of +8.11% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alnylam Pharmaceuticals, Inc. ALNY is scheduled to release results on Nov 7. The company has an Earnings ESP of +2.02% and a Zacks Rank of 3.

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Regeneron Pharmaceuticals, Inc. (REGN) : Free Stock Analysis Report
 
Alnylam Pharmaceuticals, Inc. (ALNY) : Free Stock Analysis Report
 
Agenus Inc. (AGEN) : Free Stock Analysis Report
 
Inovio Pharmaceuticals, Inc. (INO) : Free Stock Analysis Report
 
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