Alexion Likely to Keep Earnings Streak Alive - Analyst Blog

Alexion Pharmaceuticals, Inc. ALXN is set to report first quarter 2014 results before the opening bell on Apr 24. In the preceding quarter, Alexion delivered a positive 9.59% earnings surprise – the 13th consecutive beat – driven by the continued strong performance of Alexion's sole marketed drug, Soliris. Let's see how things are shaping up for this announcement.

Why a Likely Positive Surprise?

Our proven model conclusively shows that Alexion is likely to beat earnings this quarter because it has the right combination of two key ingredients.

Positive Zacks ESP: The Earnings ESP (Expected Surprise Prediction), which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +10.68%. This is a meaningful and leading indicator of a likely positive earnings surprise for the shares.

Zacks Rank #2 (Buy): Note that stocks with a Zacks Rank #1, 2 and 3 have a significantly higher chance of beating earnings estimates. We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revision momentum.

The combination of Alexion's Zacks Rank #2 and an ESP of +10.68% makes us confident of an earnings beat this season.

What is Driving the Better Than Expected Earnings?

Soliris is expected to continue its strong performance in the first quarter of 2014 as well. Sales of the drug jumped 38% to $441.9 million in the fourth quarter of 2013. Soliris is available in the U.S, EU, Japan and many other countries for the treatment of paroxysmal nocturnal hemoglobinuria (PNH). PNH is a rare genetic blood disorder. Sales of the drug have been boosted further by its label expansion into the aHUS indication in the U.S. (Sep 2011) and the EU (Nov 2011). Japanese approval for Soliris in the aHUS indication came in Sep 2013.

However, Alexion's bottom line is expected to be affected by higher operating costs as it continues to invest in its pipeline. Alexion Pharma is expecting six product approvals within the 2014 to 2018 time period including asfotase alfa (hypophosphatasia), ALXN 1101 (MoCD type A) and Soliris' label expansion.  

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows that they have the right combination of elements -- a positive Zacks Earnings ESP and a Zacks Rank #1, #2 or #3

Biogen Idec Inc. BIIB has an Earnings ESP of +8.14% and holds a Zacks Rank #1 (Strong Buy). Biogen will be reporting first quarter earnings on Apr 23.

Actavis ACT has an Earnings ESP of +1.85% and holds a Zacks Rank #2. Actavis will be reporting first quarter earnings on Apr 30.

Eli Lilly and Company LLY has earnings ESP of +4.29% and holds a Zacks Rank #3 (Hold). Eli Lilly will report first quarter earnings on Apr 24.