Is A Beat In Store For Adverum (ADVM) This Earnings Season?

We expect Adverum Biotechnologies, Inc. (NASDAQ:ADVM) to beat expectations when it reports fourth-quarter 2017 results, possibly on Mar 5.

The company has a dismal track record as it missed estimates in three of the last four quarters, resulting in an average negative earnings surprise of 8.45%. In the last reported quarter, Adverum missed estimates, delivering a negative surprise of 6.67%.

However, Adverum’s shares have rallied 152.7% in the past year, significantly outperforming a 3.3% decline registered by the industry.

Let’s see how things are shaping up for this announcement.

Factors to Consider

Adverum is a development-stage biotech company with no approved product in its portfolio.

We expect investor focus to remain on pipeline updates on the fourth-quarter earnings call.

Adverum’s pipeline consists of gene therapy programs for rare diseases, alpha 1 antitrypsin (A1AT) deficiency, wet age-related macular degeneration (“AMD”) and hereditary angioedema (“HAE”).

Adverum initiated a phase I/II study on ADVM-043 for the treatment of A1AT deficiency in December 2017. The company expects to report preliminary data in the second half of 2018.

Based on positive pre-clinical development results, the company is planning to advance its anti-VEGF gene therapy candidate, ADVM-022, to clinical stage. The candidate is being developed for treating wet AMD. Adverum is planning to file an investigational new drug (“IND”) with the FDA in the second half of 2018. The company is also developing ADVM-053 in pre-clinical study to treat HAE and is preparing to file an IND in the second half of 2018.

Adverum extended its collaboration agreement with Editas Medicine, through third quarter of 2018, in January 2018. The companies will develop treatment for up to five inherited retinal diseases using the latter’s CRISPR-based genome editing technologies.

The company has also collaborated with Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) to develop eight distinct ocular therapeutic targets, including AVA-311, which is being developed for treating juvenile X-Linked Retinoschisis.

Earnings Whispers

Our proven model shows that Adverum is likely to beat estimates this quarter as it has the right combination of two key ingredients. Stocks with a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) have a significantly higher chance of beating earnings.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +0.97%. The Zacks Consensus Estimate for the quarter is pegged at a loss of 34 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Adverum currently carries a Zacks Rank #3, which when combined with a positive ESP makes us reasonably confident of an earnings beat.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Adverum Biotechnologies, Inc. Price and EPS Surprise

Adverum Biotechnologies, Inc. Price and EPS Surprise | Adverum Biotechnologies, Inc. Quote

Other Stocks That Warrant a Look

Here are a couple of health care stocks that you may also want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.

Atara Biotherapeutics, Inc. (NASDAQ:ATRA) is expected to release results on Mar 8. The company has an Earnings ESP of +7.42% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Gemphire Therapeutics (NASDAQ:GEMP) is expected to release results on Mar 21. The company has an Earnings ESP of +8.01% and a Zacks Rank #2.

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