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Why Is Horizon Therapeutics (HZNP) Down 3.3% Since Last Earnings Report?

It has been about a month since the last earnings report for Horizon Therapeutics (HZNP). Shares have lost about 3.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Horizon Therapeutics 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 drivers.

Horizon Therapeutics' Q2 Earnings Beat Estimates

Horizon Therapeutics reported second-quarter 2019 adjusted earnings of 49 cents per share, which beat the Zacks Consensus Estimate of 38 cents and increased from 48 cents reported in the year-ago quarter.

The company reported quarterly sales of $320.6 million, up 6% year over year. The top line also beat the Zacks Consensus Estimate of $299 million.

Quarter in Detail

With effect from the second quarter of 2018, the company has been reporting financial results in two separate segments — the orphan and rheumatology segment, and the Inflammation (previously known as the primary care segment) segment.

Sales of the orphan and rheumatology segment were $223.5 million, up 11% from the prior-year quarter’s figure, driven by continued strong growth of Krystexxa, Procysbi, Rayos and Actimmune. Krystexxa sales increased 36% year over year to $79.8 million. Beginning January 2019, the company no longer recognizes certain ex-U.S. sales of Ravicti, Buphenyl and Lodotra following the divestiture of those rights in 2018. 

Second-quarter 2019 net sales of the Inflammation segment were $97.1 million, down 4% year over year.

2019 Guidance

The company now expects full-year 2019 net sales to be $1.28-$1.30 billion, up from the previous guidance of $1.26-$1.28 billion. 

Other Pipeline Updates

Horizon Therapeutics plans to initiate a clinical trial in the second half of 2019, evaluating the effect of Krystexxa on serum uric acid levels in kidney transplant patients with uncontrolled gout.

How Have Estimates Been Moving Since Then?

Estimates revision followed an upward path over the past two months.

VGM Scores

At this time, Horizon Therapeutics has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

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

Outlook

Horizon Therapeutics has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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