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Why Is Ironwood (IRWD) Down 3.1% Since Last Earnings Report?

A month has gone by since the last earnings report for Ironwood Pharmaceuticals (IRWD). Shares have lost about 3.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Ironwood due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Ironwood Q2 Earnings and Revenues Beat Estimates

Ironwood reported second-quarter 2020 adjusted earnings of 16 cents per share, which beat the Zacks Consensus Estimate of 8 cents. The company had reported adjusted earnings of 10 cents per share in the year-ago quarter.

Total revenues of $89.4 million also beat the Zacks Consensus Estimate of $83.7 million. However, revenues were down 12.5% year over year due to the absence of linaclotide API sales.

Quarter in Detail

As reported by partner AbbVie, Linzess net sales totaled $219 million in the United States, up 5.4% year over year.

Ironwood's share of net profits from the sales of Linzess in the United States (included in collaborative revenues) was $86.5 million in the second quarter, up approximately 15.3% year over year.

Per data provided by IQVIA, volume of prescribed Linzess capsules in the second quarter increased about 9% year over year.

Revenues also include $1.8 million in linaclotide royalties, $0.9 million in co-promotion revenues, and $0.2 million in other revenues.

On its second-quarter earnings call, Ironwood stated that the COVID-19 pandemic has not caused significant disruptions to manufacturing operations nor supply of Linzess in the United States. The company has enough supply of Linzess to meet U.S. demand in 2020.

2020 Guidance

Ironwood re-issued its outlook for 2020 after withdrawing the same on the first-quarter earnings call due to uncertainty related to COVID-19 pandemic.

The company expects net sales of Linzess to grow in mid-single percentage points in 2020. Total revenues are anticipated in the range of $360 million-$380 million. The company expects adjusted EBITDA to be more than $105 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 8.75% due to these changes.

VGM Scores

At this time, Ironwood has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Ironwood has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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