Genentech Earnings Preview: Cure for Portfolio Ills?
This is a big biotech with a number of successful cancer drugs and one for macular degeneration (yes, the needle-in-the-eye drug).
Reports Q1 earnings Thursday 4/10 at about 405p ET. Conference call at 5p ET.
WHAT WILL MOVE THE STOCK:
DRUG SALES - As CNBC's Pharmaceuticals Reporter Mike Huckman always reminds me, drug companies move on sales of their biggest drugs — earnings numbers tend to take a back seat. So what are the drugs to watch for Genentech ? Avastin (colorectal, lung and breast cancer) leads the list. Also keep an eye on Rituxan (rheumatoid arthritis and non-Hodgkin's lymphoma), Herceptin (breast cancer) and Lucentis (macular degeneration).
Scroll down to the estimates section for the current forecasts for these drugs.
Rituxan is co-marketed with Biogen Idec , so that company's share price could move on good (or bad) Rituxan's sales.
GUIDANCE - Rodman & Renshaw and a few other firms are less concerned with last quarter's results. Instead, they're focusing on how Genentech will do in the rest of 2008. At Genentech's analyst meeting last month, the company raised 2008 earnings guidance to $3.35-$3.45 per share from $3.30-$3.45. Will that forecast be tweaked again? What is the outlook for sales of the company's key drugs? Is the outlook good enough to keep DNA's shares surging? (see Factoids)
PIPELINE - Genentech has a number of drugs that are being developed. Are there any progress updates in the earnings report?
INCREASED STOCK BUYBACK OR DIVIDEND? - At its analyst meeting last month, Genentech mentioned it is considering upping its stock repurchase program or starting to pay a dividend. Either would almost certainly be a boost for DNA's share price.
Avastin $629 million, up 18.0% from Q1 '07 sales of $533 million
Rituxan $607 million, up 13.5% from Q1 '07 sales of $535 million
Herceptin $343 million, up 10.3% from Q1 '07 sales of $311 million
Lucentis $202 million, down 4.3% from Q1 '07 sales of $211 million
Q1 EPS up 11% to $0.82, revenues up 9% to $3.113 billion
Q2 EPS up 10% to $0.86, revenues up 8% to $3.236 billion
FY 08 EPS up 17% to $3.43, revenues up 11% to $13.056 billion
Source: Thomson Financial
Year-ago actuals: Q1 EPS $0.74, Rev. $2.843 billion
SMACKING ITS COMPETITORS - Genentech investors, pat yourselves on the back. Your shares are up 17.9% since the beginning of 2008, handily beating competitors like GlaxoSmithKline (down 13.9%) , Amgen (down 10.4%) , and Bristol-Myers Squibb (down 18.9%) .