4 Biotech Stocks Likely to Outpace Q2 Earnings Estimates

The Earnings Trends report indicates that, as of July 29, 10.2% of the companies in the Medical sector, representing about 32.2% of the sector’s market capitalization, have reported quarterly earnings. While 100% of the companies topped on earnings, 94.7% beat on sales. While earnings increased 18.1% year over year, sales grew 6.8%. Overall, second-quarter earnings are expected to fall 15.2% year over year, while revenues are likely to rise 6.1%.

Zeroing in on Winners

Even though some of the bigwigs from the biotech sector have already announced results, there are many companies that are yet to report. Some of them seem poised to surpass estimates for the quarter. Here, we have highlighted four biotech companies, Arcutis Biotherapeutics ARQT, Nuvation Bio NUVB, Perspective Therapeutics, Inc. CATX and Tango Therapeutics TNGX — that are expected to deliver a beat in their upcoming quarterly results.

Earnings ESP is our proprietary methodology for determining the stocks with the best chance of delivering an earnings surprise. It shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.

According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. The selection can be made with the help of the Zacks Stock Screener.

Our research shows that the chance of an earnings surprise for stocks with this combination is as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

4 Biotech Stocks That Match the Criteria

Arcutis Biotherapeutics

Arcutis Biotherapeutics, a commercial-stage medical dermatology, has a growing portfolio of advanced targeted topicals approved to treat three major inflammatory skin diseases. Continued robust demand for flagship product, Zoryve, is boosting top-line revenue growth.

ARQT has an Earnings ESP of +52.94% and a Zacks rank 2. The Zacks Consensus Estimate for the to-be-reported quarter’s revenues is pegged at $121.85 million, while the same for earnings is pinned at 9 cents per share.

ARQT is scheduled to report second-quarter results on Aug. 5.

Nuvation Bio

Nuvation Bio is a global oncology company focused on developing innovative therapies for difficult-to-treat cancers. Its pipeline includes taletrectinib (IBTROZI), a next-generation ROS1 inhibitor; safusidenib, a brain-penetrant IDH1 inhibitor; and a novel drug-drug conjugate (DDC) program, all aimed at improving outcomes for patients with cancer.

NUVB has an Earnings ESP of +10.35% and a Zacks Rank of 2. The Zacks Consensus Estimate for revenues is pegged at $27.12 million, while the same for earnings is pinned at a loss of 15 cents per share.

NUVB is scheduled to report second-quarter results on Aug. 6.

Perspective Therapeutics

Perspective Therapeutics is a radiopharmaceutical development company pioneering advanced treatments for cancers throughout the body. The company is advancing a portfolio of clinical-stage programs in the United States, including VMT-α-NET (neuroendocrine tumors), VMT01 (melanoma), and PSV359 (solid tumors).

CATX has an Earnings ESP of +1.89% and a Zacks Rank of 2. The Zacks Consensus Estimate for revenues is pegged at $0.2 million, while the same for earnings is pinned at a loss of 27 cents per share.

CATX is scheduled to report second-quarter results on Aug. 10.

Tango Therapeutics

Tango Therapeutics is a clinical-stage biotechnology company focused on discovering novel cancer drug targets and developing next-generation precision medicines. The company is advancing two selective PRMT5 inhibitors targeting MTAP-deleted cancers.

TNGX’s lead candidate, vopimetostat (TNG462), is being evaluated for non-central nervous system (non-CNS) cancers as both a monotherapy and in combination with RAS inhibitors. The company's second candidate, TNG456, is a next-generation, brain-penetrant PRMT5 inhibitor being developed for central nervous system (CNS) cancers, including glioblastoma (GBM).

The company has an Earnings ESP of +1.06% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for second-quarter earnings is pegged at a loss of 31 cents per share.

Tango Therapeutics beat on earnings in two of the trailing four quarters and met in the remaining two, delivering an average surprise of 301.61%. 

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This article originally published on Zacks Investment Research (zacks.com).

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