Monthly Archives: April 2017

Vertex Pharmaceuticals Incorporated (VRTX - Free Report) reported first-quarter 2017 earnings per share of 13 cents (including the impact of stock-based compensation expense), which beat the Zacks Consensus Estimate of 4 cents. Notably, the company had posted a loss of 13 cents in the year-ago quarter. Strong product revenues and cost control led to higher profits in the quarter.

Excluding stock-based compensation expense, first-quarter adjusted earnings were 41 cents per share compared with the year-ago figure of 9 cents.

Including upfront revenues of $230 million received from German phama company, Merck KGaA for the out-licensing of four oncology programs; restructuring costs and other adjustments, reported earnings were 99 cents per share.

Vertex reported revenues of $714.7 million in the first quarter, up 79.5% year over year gaining from the upfront payment from Merck KGaA. Excluding the upfront revenues, adjusted total revenue was $482.3 million, which surpassed the Zacks Consensus Estimate of $459.1 million by 5.3%.

This year so far, Vertexs shares have risen 61.5%, outperforming an increase of 4.8% for the Zacks classified Large-Cap Pharma industry.

CF Franchise Sales Rise

Vertexs first-quarter revenues consisted of sales from cystic fibrosis (CF) products Kalydeco and Orkambi, collaborative ($232.6 million) and royalty revenues ($1.5 million). CF product revenues were $481 million in the first quarter, up 22% year over year.

The company reported a 9% increase in Kalydeco sales to $186 million. Kalydeco sales gained from one-time adjustments mainly related to European reimbursement agreements.

Orkambi (lumacaftor/ivacaftor) delivered sales of $295.0 million, up 32% year over year. On a sequential basis, Orkambi sales rose around 7% in the first quarter supported by rapid uptake in the pediatric indication for which approval was received in Sep 2016.

Cost Discussion

Adjusted (including stock-based compensation expenses) research and development expenses increased 5.9% to $271.4 million in the first quarter due to higher costs related to progress on the CF pipeline. Adjusted (including stock-based compensation expenses) selling, general and administrative (SG&A) expenses increased 5.5% to $110.5 million due to increased investment to support the global launch of Orkambi.

Maintains 2017 Guidance

Vertex maintained its 2017 guidance for Orkambi revenues, which was provided in early Jan 2017, while raising the same for Kalydeco. Orkambi revenues are expected in the range of $1.1$1.3 billion while Kalydeco revenues are estimated in the range of $710 to $730 million, higher than $690$710 million guided previously. Management said the uptick in guidance was the result of a one-time gain received this quarter as well as strong demand trends for the product.

Management continues to believe that Orkambi sales growth will be dependent on reimbursement discussions in Europe in 2017. Vertex has faced many challenges with respect to commercialization of Orkambi in ex-U.S. markets due to re-imbursement hurdles, discontinuations by patients who had previously initiated treatment with Orkambi and a slower-than-anticipated launch in Germany.

Combined adjusted research and development (R&D) and selling, general and administrative (SG&A) expenses in 2017 are anticipated in the range of $1.25$1.30 billion. Costs are expected to be higher than 2016 levels due to increased costs related to CF pipeline development and increased commercial investment to support Orkambi and Kalydeco.

Our Take

Vertexs first-quarter results were strong with the company beating expectations for both earnings and revenues as sales of its CF drugs rose.

Meanwhile, Vertexs CF pipeline is quite strong with a broad portfolio of next-generation CF correctors. Investor focus will now be on the triple combination CF regimens, which are crucial for long-term growth at Vertex. Data from three triple combination regimes in CF patients are expected in the second half of this year. We remind investors that last month, Vertex announced positive data from two phase III studies evaluating Kalydeco in combination with VX-661 (tezacaftor) in patients suffering from CF aged 12 years and above with two copies of the F508del mutation. Both studies EVOLVE and EXPAND met their primary endpoints and demonstrated statistically significant improvements in lung function in patients with CF.Based on positive outcome from the studies, the company is planning to submit regulatory applications in the U.S. and EU in the third quarter of 2017.

Meanwhile, the company is also looking to buy CF candidates, which can be combined with its tezacaftor (VX-661) and Kalydeco to create triple combinations.

Just last month, Vertex announced a definitive deal to buy the worldwide development and commercialization rights of Concert Pharmaceuticals (CNCE - Free Report) CF pipeline candidate, CTP-656 for an upfront payment of $160 million in cash.

Vertex plans to develop CTP-656 for potential use in future once-daily regimens in combination with its other pipeline drugs to treat the underlying cause of CF.

Undoubtedly, the CF market has been attracting the interest of several companies like AbbVie, Pfizer, Inc. (PFE - Free Report) and Sanofi (SNY - Free Report) . These companies are pursuing the development of CFTR potentiators, CFTR correctors and candidates with other mechanisms of action that can address the underlying cause of CF.

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Vertex (VRTX) Q1 Earnings Top, CF Products Sales Strong - Zacks.com

CF Industries to Announce Its 1Q17 Earnings: What to Expect PART 1 OF 8

CF Industries (CF), one of the largest producers of nitrogen fertilizers in North America, is set to report its 1Q17 earnings on May 3, 2017, after the market closes. Analysts estimate CFs earnings to come in at -$0.39 per share, which would be a steep decline from $0.40 in 1Q16.

Before we dig deeper into analysts earnings expectations for CF Industries, lets look at how the stock has performed compared to its benchmarks.

On a trailing 52-week basis, CFstock has fallen 15.2% and was trading at $27.20 on April 26, 2017. Among the benchmarks, the VanEck Vector Agribusiness ETF (MOO) has returned 16.8% and the SPDR S&P 500 ETF (SPY) has returned 15.2% over the same period.

Among CF Industries peers, PotashCorp (POT) has fallen 2.2%, while CVR Partners (UAN) has fallen 41.8% over the same period. On the other hand, Agrium (AGU) has returned 5% on a trailing 52-week basis.

In this series, well look at analysts earnings expectations for CF Industries (CF). Well also look at forecasts for some key financial metrics such as revenues, profit margins, and capital outlay over the next 12 months.

Well compare CF Industries valuation multiple with its peers. Well also look at the latest changes in analysts recommendations and price targets for the stock.

More:

CF Industries to Announce Its 1Q17 Earnings: What to Expect - Market Realist

CF Industries to Announce Its 1Q17 Earnings: What to Expect PART 2 OF 8

CF Industries (CF) revenues come from its AN (ammonia nitrate), Granular Urea, UAN (urea ammonia nitrate), Ammonia, and Other segments. Of these five reported segments, CF Industries earns most of its salesabout one-thirdfrom the UAN segment, followed by the Ammonia and Granular Urea segments. Now, lets look at analysts sales estimates for 1Q17.

For the upcoming 1Q17 release, analysts estimate CF Industries to report ~$1.01 billion, which would grow ~1% year-over-year compared to ~$1.00 billion in 1Q16.

For the next four quarters, the companys sales are estimated to come in at ~$4.2 billion, which would grow 15% compared to ~$3.7 billion in the recent four quarters.

In 2016, sales had declined ~14% year-over-year as a result of declining nitrogen prices. While the demand for nitrogen product remains strong, not much could be said about the direction in which the fertilizer prices move. This is true especially for nitrogen producers such as CF Industries, PotashCorp (POT), CVR Partners (UAN), and Terra Nitrogen (TNH) that have natural gas as the underlying input cost.

Natural gas, which accounts for about two-thirds of the cost of nitrogen production, can be volatile, impacting the profitability of the above players (XLB).

In the next two parts, well discuss profitability for CF Industries.

Link:

CF Industries' Sales Estimated to Rise in 2017 - Market Realist

You knew this post was coming.

With Rajai Davis out with a hamstring injury, the As are slightly short staffed in the outfield. Even with Davis around, you could argue theyre short staffed, often relying on one of their platoon outfielders to play against their like handed counterparts. Davis should be back roughly when his ten day stint is up, but hammy strains like to loiter, and its possible the now 36 year old will need more time to heal.

That brings us to Leonys Martin, recently DFAd former Seattle Mariner. If you get DFAd by a club struggling as mightily as the Ms, things probably arent going well for you personally, and that was indeed the case for Martin. In 54 at bats this year, Martin has just six hits good for an unsightly .111/.172/.130 triple slash line.

Hes only 29 though, a year removed from a solid season as a reliable centerfielder in the midst of a quietly decent career. Should the As take a shot at recently DFAd Leonys Martin?

Since Martin was DFAd by the Mariners, hes been placed on waivers. All 30 teams now have the chance to claim him during his ten day waiver period, with the team with the weakest record in 2016 (starting in the AL then moving to the NL) getting first dibs at making a deal. If no deal is made during the ten day period, Martin would become a free agent available to all 30 teams.

While Martin is intriguing to a number of teams, his price tag in a trade is unlikely to be high. The Ms might fetch a lottery ticket reliever or a potential utility player, but Martin just wont yield a solid prospect in return.

That said, there will be competition for his services as there are some truly desperate teams out there. The Giants just lost Denard Span to injury and are trotting Drew Stubbs into their outfield, a move that would have drawn ire in 2012. While Martin would be a decent play for the As, theres just more in it for a team like the Giants. With a closing window and playoff odds that are fading with every loss, theyre more willing to overpay, something the As really shouldnt do.

Dont count the As out, though. If they wanted to make a trade for Martin, theyre high up on the waiver wire and have a deep farm system with plenty of meh guys suitable to net Martin in return. Should he clear waivers, the As could offer him an enticing home with the chance to play a role suitable for his skills.

A real life, actual, functioning defensive center fielder! Its been roughly forever since the As have had one of those, and the fleet footed Martin would help offset Matt Joyces ankle weights in right and Khris Daviss noodle arm in left. A great way to help flawed corner outfielders is to stick a bonafide defender in between.

Jaff Decker has been good, but hes probably not as good as hes played thus far. His more likely spot is as a fourth outfielder with his solid but not amazing defense at all three spots and his platoon bat. Leonys Martin is a lottery ticket, similar to Decker in terms of overall value, and two lottery tickets is always better than one. Acquiring Martin would push Decker towards his likely home of fourth outfielder while improving the As centerfield platoon as well.

Finding Martin a roster spot wouldnt be a difficult task. Matt Olson is basically Matt Joyce in right and while itd be nice to get Olson big league at bats in the near future, hes redundant. Theres no room for him at first and with Joyce in his way, a trip to Nashville is an inevitability. Hes up because of circumstance. Decker would shift into Olsons current role but with added flexiblity, and Olson would get the everyday at bats he deserves.

For the As to compete, they need to take risks. Martin represents a higher upside heavy half of the centerfield platoon, a risk that could keep the As afloat defensively. His awful start came in a tiny sample and hes just a year removed from a very solid season. The As should capitalize on the Mariners overreaction.

Finally, imagine this cannon gunning down Albert Pujols smug ass trying to stretch a groundball to centerfield into a single. Yum.

No, thats not Derek Norriss quiet younger brother. Thats Jaff Decker.

If the As were Decker-less, the decision would be obvious. Pursuing Martin would be a no-brainer, hed be a lottery ticket made for the As roster. Bringing Martin into the fold would put Decker out of his platoon job and into the fourth outfielder role.

Decker has been solid thus far, and too similar overall to Martin to warrant a pursuit. Like Martin, hes a platoon player, fit only to face righties with almost no utility against lefties. Both profile as average-ish defenders, though Martins defensive upside is markedly higher. On the flip side, Deckers offensive ceiling is a touch better than Martins, basically making the difference between the two a wash.

If Martin has any advantage at all, its superseded by Deckers standing on the roster and impressive play to start the year. When youre a team slated to be bad, you dont mess with a good thing. Decker has been a bright spot early and with his youth and limited experience, its possible his early season success could last. Hes a potential long term asset for the As with six years of team control left, and the As would be well suited to continue down Decker-road until its clear what kind of player he is.

Martin is more of a short term play, getting up in age and down in value, unlikely to land on big league rosters for more than a few more years. Hes also very much a lottery ticket - you can hope the upside is still there but the most likely out come is that hes a bust. His defense has slipped by almost every metric, putting more pressure on his always meager bat. Hoping to squeeze more value out of an aging speedster just isnt worth giving up Decker at bats for, and theres no guarantee Martin would make the As any better on either side of the ball.

While there is a potential fit, it just doesnt make perfect sense for the As wont and shouldnt happen. There are teams that are more desperate, therefore wiling to offer more to both the Mariners in terms of prospects and Martin in terms of playing time. The As cant guarantee anything more than sporadic playing time at this point, something a number of teams could top.

Martin is a bit like Decker in terms of his overall potential value. The former is a better bet with the glove, the latter representing more upside with the bat, and both topping out as part time players. The As have a good thing going with Decker now; going with Martin would represent a risk on multiple levels.

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Oakland A's CF target: Leonys Martin - Athletics Nation