Yahoo Finance Can Prothena (PRTA) Pull a Surprise This Earnings Season?
Prothena Corporation plc PRTA is scheduled to report third-quarter 2016 results on Nov 1 after the market closes.
Last reported quarter, the company recorded a negative earnings surprise of 32.58%. Let's see how things are shaping up for this announcement.
Factors at Play
Prothena’s top line primarily comprises collaboration revenues earned through its license, development and commercialization agreements. The company earns collaboration revenues mainly under its license agreement with Roche Holding AG RHHBY for PRX002.
With no approved product in its portfolio, investor focus should remain on pipeline updates by the company. The company’s pipeline candidates include NEOD001 for the treatment of AL amyloidosis, PRX003 for the treatment of inflammatory diseases, including psoriasis and PRX002 for the treatment of Parkinson’s disease and other related synucleinopathies.
Currently, NEOD001 is being developed in a phase III study (VITAL Amyloidosis Study) and a phase IIb study (PRONTO). Meanwhile, both PRX002 and PRX003 are being evaluated in phase I studies.
Like any other development-stage biotechnology company, Prothena is likely to see an increase in research and development expenses due to higher spending on pipeline development.
Surprise History
Prothena’s track record has been has dismal so far. Over the four trailing quarters, the company’s earnings have missed estimates thrice and beat the same on one occasion, bringing the average negative earnings surprise to 13.78%.
PROTHENA CP PLC Price and EPS Surprise
PROTHENA CP PLC Price and EPS Surprise | PROTHENA CP PLC Quote
What Our Model Indicates
Our proven model does not conclusively show that Prothena is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. Unfortunately, that is not the case here, as you will see below.
Zacks ESP: The Earnings ESP for Prothena is 0.00%, as both the Most Accurate Estimate and the Zacks Consensus Estimate stand at a loss of $1.23.
Zacks Rank: Prothena’s Zacks Rank #3 increases the predictive power of ESP, its 0.00% ESP makes surprise prediction difficult. Please check our Earnings ESP Filter that enables you find stocks that are expected to come out with earnings surprises.
Note that we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a couple of health care stocks you may want to consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter.
Amgen Inc. AMGN is scheduled to report results on Oct 27. The company has an Earnings ESP of +1.08% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Aerie Pharmaceuticals, Inc. AERI is +8.57% and it carries a Zacks Rank #3. The company is expected to release earnings on Nov 1.
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