The Gory Details of Cubist Pharmaceuticals' Earnings Miss

Cubist Pharmaceuticals (NAS: CBST) reported earnings on Jan. 19. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Cubist Pharmaceuticals beat expectations on revenue and whiffed on earnings per share.

Compared to the prior-year quarter, revenue improved significantly, and earnings per share shrank.

Margins dropped across the board.

Revenue details
Cubist Pharmaceuticals notched revenue of $213 million. The 12 analysts polled by S&P Capital IQ expected a top line of $205 million. Sales were 32% higher than the prior-year quarter's $162 million.


Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
EPS came in at $0.11. The two earnings estimates compiled by S&P Capital IQ anticipated $0.31 per share. GAAP EPS of $0.11 for Q4 were 13% lower than the prior-year quarter's $0.13 per share.


Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 77.0%, 100 basis points worse than the prior-year quarter. Operating margin was 27.8%, 160 basis points worse than the prior-year quarter. Net margin was 3.2%, 580 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $202 million. On the bottom line, the average EPS estimate is $0.35.

Next year's average estimate for revenue is $869 million. The average EPS estimate is $1.85.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 314 members out of 330 rating the stock outperform, and 17 members rating it underperform. Among 97 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 93 give Cubist Pharmaceuticals a green thumbs-up, and four give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Cubist Pharmaceuticals is outperform, with an average price target of $45.13.

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At the time this article was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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