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Akorn (AKRX) to Report Q4 Earnings: What's in the Cards?

We expect Akorn Inc. AKRX to provide details on the progress of the potential sale of its business when it reports fourth-quarter 2019 results.

The company’s earnings beat estimates in three of the trailing four quarters and missed in the remaining one. The four-quarter miss is 17.26%, on average. In the third quarter, Akorn reported a positive earnings surprise of 150%.

Shares of Akorn have slumped 65.9% in the past year against the industry’s growth of 1.9%.

Let’s see how things are shaping up for the quarter to be reported.

Factors at Play

For 2019, the company expects net revenues toward the lower end of the $690-$710 million guidance range.

We expect the company’s sales volume to have declined in the fourth quarter due to competition in a number of products and supply shortfalls from the continued production ramp up at the Somerset manufacturing facility. However, we expect the declined volumes to have been offset by price increases on certain exclusive products in the fourth quarter.

Key Developments in Q4

We also expect the company to provide updates on new product launches during the quarter.

During the third quarter, the company improved its customer service. Throughout the year, its plant product availability increased, service levels were higher, and as a result, failure to supply claims received in the third quarter declined significantly. We expect the trend to continue in the fourth quarter.

Akorn is exposed to certain challenges, which include two of its facilities receiving FDA warning letters. The company is also loaded with a gross debt of about $840 million, as of the end of the third quarter. Thus, to meet these challenges of refinancing its existing term loan, Akorn has entered into an agreement to execute a sale of its business. This gives Akorn the opportunity to address its capital structure and litigation-related overhangs by seeking a new owner that will continue to invest in its business and future growth. An update is expected in the fourth-quarter conference call.

What Our Model Indicates

Our proven model does not conclusively predict an earnings beat for Akorn this season. 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. But that is not the case here, as you will see below.

Earnings ESP: Akorn has an Earnings ESP of 0.00%, as both the Zacks Consensus Estimate and the Most Accurate Estimate are pegged 0 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.


Akorn, Inc. Price and EPS Surprise


Akorn, Inc. price-eps-surprise | Akorn, Inc. Quote

Stocks That Warrant a Look

Here are a few healthcare stocks worth considering, as our model shows that these have the right mix of elements to beat estimates this time around.

Vericel Corporation VCEL has an Earnings ESP of +11.29% and a Zacks Rank #1. The company is scheduled to release fourth-quarter results on Feb 25.

Sage Therapeutics Inc. SAGE has an Earnings ESP of +2.74% and a Zacks Rank #3. The company is scheduled to release fourth-quarter results on Feb 27.

AMAG Pharmaceuticals, Inc. AMAG has an Earnings ESP of +31.03% and a Zacks Rank #3.

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