Radius Health, Inc. (RDUS) is expected to report its fourth-quarter and full-year 2014 results on Feb 16, 2015.
Radius Health beat earnings estimates in one of the last two trailing quarters. The average negative earnings surprise over the last four quarters is 125.76%. Let’s see how things are shaping up for this announcement.
Factors Influencing Fourth-Quarter 2014
Since Radius Health is a development-stage biopharmaceutical company, currently focused on the development of a potential treatment for osteoporosis, investors are expected to keep an eye on its pipeline progress.
In Dec 2014, the company announced positive top-line 18-month data from the phase III ACTIVE study evaluating its lead candidate abaloparatide-SC for the reduction of fractures in postmenopausal osteoporosis. The company said that it will file for its approval in the second half of 2015. Updates on an ongoing six-month ACTIVExtend study on abaloparatide-SC should be provided on the company’s fourth-quarter call. Additionally, Radius Health is enrolling patients in a phase I two-part, dose-escalation study on RAD1901 for the treatment of postmenopausal women with advanced estrogen receptor positive and HER2-negative breast cancer. Updates on the planned phase IIb study on vasomotor symptoms (slated for initiation in the second half of 2015) are also expected.
Radius Health received aggregate proceeds, net of underwriting discounts, commissions, and estimated offering costs of approximately $53.3 million upon the achievement of an important milestone in Oct 2014 due to the completion of a secondary public offering (following its initial offering in Jun 2014). The company said on its third-quarter call that this fund will be used to boost pipeline development.
What Our Model Indicates
Our proven model shows that Radius Health is likely to beat the Zacks Consensus Estimate in the fourth quarter of 2014. 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) to be able to announce an earnings surprise. This is the case as elaborated below.
Zacks ESP: The Earnings ESP for Radius Health is +5.00%. This is because the Most Accurate estimate stands at a loss of 57 cents per share while the Zacks Consensus Estimate is a loss of 60 cents per share.
Zacks Rank: Note that stocks with Zacks Rank #1, 2 and 3 have a significantly higher chance of beating earnings estimates. The combination of Radius Health’s Zacks Rank #3 (Hold) and an earnings ESP of +5.00% makes us confident of an earnings beat on Feb 16.
Stocks That Warrant a Look
Here are a couple of health care stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.
Actavis (ACT) has an Earnings ESP of + 6.58% and carries a Zacks Rank #2. The company is scheduled to release fourth-quarter 2014 results on Feb 18, 2015.
ARIAD Pharmaceuticals, Inc. (ARIA) has an Earnings ESP of +33.33% and carries a Zacks Rank #3. The company is expected to release fourth-quarter 2014 results on Feb 19, 2015.
Impax Laboratories, Inc. (IPXL) has an Earnings ESP of + 54.55% and carries a Zacks Rank #1. The company is expected to release fourth-quarter 2014 results on Feb 24, 2015, before the opening bell.
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