Reata Pharmaceuticals, Inc. (RETA) Down 37.8% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Reata Pharmaceuticals, Inc. (RETA). Shares have lost about 37.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Reata Pharmaceuticals, Inc. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Reata Q4 Earnings Beat Estimates, Revenues Miss

Reata reported fourth-quarter 2019 adjusted loss of $1.59 per share, narrower than the Zacks Consensus Estimate of a loss of $6.15 per share. The company had incurred an adjusted loss of 77 cents in year-ago period.

Revenues, primarily collaboration payments from its partners, were $2.7 million in the quarter, missing the Zacks Consensus Estimate of $6 million. In the year-ago period, revenues were $8.5 million.

Quarter in Details

Revenues for the quarter included $0.7 million from the AbbVie (NYSE:ABBV) collaboration agreement, $1.2 million from the license agreement with Kyowa Kirin, and $0.8 million from other sources.

Adjusted general and administrative expenses were $22.3 million, compared with $7.9 million in the year-ago quarter. Adjusted research & development expenses were $40.2 million, compared with $25.3 million in the year-ago period.

The company ended the quarter with $664.3 million in cash and cash equivalents, compared with $240.1 million as of Sep 30, 2019. The significant increase was due to proceeds of $505 million from the sale of its common share during the quarter.

2019 Results

Reata incurred an adjusted loss of $4.58 per share for the full year, compared with an adjusted loss of $2.53 per shares in the year-ago period. Full-year revenues were $25.3 million, compared with $53.6 million in the year-ago period.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -29.25% due to these changes.

VGM Scores

Currently, Reata Pharmaceuticals, Inc. has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Reata Pharmaceuticals, Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.