What's In The Cards For Aerie (AERI) This Earnings Season?

Aerie Pharmaceuticals, Inc. (NASDAQ:AERI) is scheduled to second-quarter 2017 results on Aug 1. Last quarter, the company missed expectations by 2.70%.

In fact, Aerie’s performance over the last four quarters has been disappointing. The company reported a wider-than-expected loss in the four trailing quarters, with an average negative surprise of 17.1%.

Aerie’s share price has increased 44.6% year to date, while the Zacks classified industry gained 7.1%.

Factors Influencing This Quarter

With no approved product in its portfolio, Aerie depends heavily on its late-stage candidates-Rhopressa and Roclatan. Hence, we expect investor focus on pipeline updates.

Aerie’s lead candidate, Rhopressa, a once-daily formulation for lowering intraocular pressure (IOP) is being evaluated in patients suffering from open-angle glaucoma and ocular hypertension. Rhopressa is being evaluated in two phase III registration studies – the Rocket 4 study (six-month data expected in the second quarter of 2017), designed to gain adequate safety data for regulatory filings in EU and the Rocket 3 study, a 12-month, safety-only study for regulatory filings in Canada.

Aerie expects to submit regulatory application for Rhopressa in the EU in the second half of 2017 while the same was submitted to the FDA. The FDA notified the company about the completion of the initial 60-day review of the NDA for Rhopressa. The FDA determined that the application is sufficiently complete to permit a substantive review and set the Prescription Drug User Fee Act (PDUFA) goal date for the completion of the FDA’s review as Feb 28, 2018.

Apart from Rhopressa, Aerie is also evaluating Roclatan, a once-daily, quadruple-action fixed-dose combination of Rhopressa and Xalatan (latanoprost). Roclatan is currently in a phase III registration studies – Mercury 1 and Mercury 2. Data from Mercury 1 and Mercury 2 were positive. Based on the success of the Mercury 1 and Mercury 2, the company plans to file a NDA for Roclatan too, by the end of 2017 or early 2018.

The company expects expenses in 2017 to be flat year over year with an increase of about $16 million of capital expenditures in 2017. The company expects clinical expenses to decline in 2017 as it winds down its U.S. based trials. However, the company expects increase in commercialization and scale-up expenses and growth of its medical affairs team along with the addition of sales and managed care leadership.

What Our Model Indicates

Our proven model does not conclusively show an earnings beat for Aerie this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, that is not the case here as you will see below.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 84 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Aerie has a Zacks Rank #2, which is favorable. However, 0.00% ESP makes surprise prediction difficult for the quarter.

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

Stocks to Consider

Here are some other health care stocks that you may want to consider, as our model shows that they too have the right combination of elements to post an earnings beat this quarter.

Clovis Oncology, Inc. (NASDAQ:CLVS) has an Earnings ESP of +6.30% and a Zacks Rank #3. The company is scheduled to release results on Aug 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Intercept Pharmaceuticals, Inc. (NASDAQ:ICPT) has an Earnings ESP of +9.39% and a Zacks Rank #3. The company is expected to release results on Aug 3.

Impax Laboratories (NASDAQ:IPXL) has an Earnings ESP of 7.14% and a Zacks Rank #3 (Hold). The company is expected to release results on Aug 9.

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