Earnings season is now starting to wind down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Spectrum Pharmaceuticals is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed kneejerk reaction to news that turns out to be exactly the wrong move.
Spectrum has thrived recently despite a huge short position in the stock, as bearish investors bet that the shortages of a generic drug that challenges the company's lead product will eventually end and send Spectrum's stock plunging. Let's take an early look at what's been happening with Spectrum Pharmaceuticals over the past quarter and what we're likely to see in its quarterly report on Thursday.
Stats on Spectrum Pharmaceuticals
Analyst EPS Estimate
Change From Year-Ago EPS
Change From Year-Ago Revenue
Earnings Beats in Past 4 Quarters
Source: Yahoo! Finance.
Will Spectrum Pharmaceuticals stay healthy?
Analysts have been all over the map with their estimates on Spectrum, pulling them up and down at various points over the past three months. But just in the past month, consensus earnings per share have fallen by more than a dime for the just-ended quarter. The stock has encountered the same trend, rising 7% since mid-November but falling a similar amount in just the past couple of weeks.
Spectrum's big seller is Fusilev, which is used in treating colorectal cancer. Because there's a generic version of the drug available called leucovorin, one would ordinarily think that Spectrum's sales would have dropped. But Teva and new supplier Sagent are both listed as having leucovorin shortages, with Teva citing manufacturing delays and Sagent pointing to increased demand. Still, Spectrum is apparently discounting its Fusilev sales to encourage doctors to prescribe it rather than switching to a cheaper generic.
But Spectrum has other drugs as well. Non-Hodgkin's lymphoma drug Zevalin has seen relatively slow sales, but that seems to be an industrywide phenomenon, as Biogen Idec and Genentech's Rituxan has seen similarly slow sales. In addition, Spectrum bought Allos Therapeutics last year, which included cancer therapy Folotyn, and also reacquired the full rights to bladder-cancer drug apaziquone from partner Allergan . Moreover, Spectrum has a pipeline of cancer and renal-disease treatments that have included some promising results.
In Spectrum's report, watch for signs of slowing growth, including information on whether a recent marketing campaign targeting Zevalin users is working. With shares having been stuck in neutral for much of 2012, signs of success could boost the stock substantially.
While you can certainly make huge gains in biotech and pharmaceutical stocks, the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.
Click here to add Spectrum Pharmaceuticals to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.
The article Spectrum Pharmaceuticals Earnings: An Early Look originally appeared on Fool.com.
Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned. 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.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.