Axsome's Q3 Earnings Beat, Auvelity Drives Sales Growth, Stock Up

SpringWorks Therapeutics, Inc. SWTX incurred a loss of 72 cents per share in the third quarter of 2024, which was narrower than the Zacks Consensus Estimate of a loss of 76 cents. The company had reported a loss of $1.27 per share in the year-ago quarter.

In the third quarter, total revenues were $49.3 million, which missed the Zacks Consensus Estimate of $54 million. Total revenues comprised net product sales of Ogsiveo (nirogacestat), SpringWorks’ only marketed drug. The company did not generate any revenues in the year-ago quarter.

The FDA approved Ogsiveo for treating adult patients with progressing desmoid tumors who require systemic treatment in November 2023.

Following the FDA nod, Ogsiveo became the first approved product in the company’s portfolio and the first approved drug for treating desmoid tumors, a rare, aggressive tumor of the soft tissues.

Shares of SpringWorks have plunged 9.3% so far this year compared with the industry’s decline of 0.9%.

Shares of Jazz Pharmaceuticals (JAZZ) have gained 8.9% over the past four weeks to close the last trading session at $127.74, but there could still be a solid upside left in the stock if short-term price targets of Wall Street analysts are any indication. Going by the price targets, the mean estimate of $175.83 indicates a potential upside of 37.7%.

The average comprises 18 short-term price targets ranging from a low of $113 to a high of $230, with a standard deviation of $33.34. While the lowest estimate indicates a decline of 11.5% from the current price level, the most optimistic estimate points to an 80.1% upside. More than the range, one should note the standard deviation here, as it helps understand the variability of the estimates. The smaller the standard deviation, the greater the agreement among analysts.

While the consensus price target is a much-coveted metric for investors, solely banking on this metric to make an investment decision may not be wise at all. That's because the ability and unbiasedness of analysts in setting price targets have long been questionable.

But, for JAZZ, an impressive average price target is not the only indicator of a potential upside. Strong agreement among analysts about the company's ability to report better earnings than they predicted earlier strengthens this view. While a positive trend in earnings estimate revisions doesn't gauge how much a stock could gain, it has proven to be powerful in predicting an upside.

Here's What You Should Know About Analysts' Price Targets

According to researchers at several universities across the globe, a price target is one of many pieces of information about a stock that misleads investors far more often than it guides. In fact, empirical research shows that price targets set by several analysts, irrespective of the extent of agreement, rarely indicate where the price of a stock could actually be heading.

While Wall Street analysts have deep knowledge of a company's fundamentals and the sensitivity of its business to economic and industry issues, many of them tend to set overly optimistic price targets. Are you wondering why?

They usually do that to drum up interest in shares of companies that their firms either have existing business relationships with or are looking to be associated with. In other words, business incentives of firms covering a stock often result in inflated price targets set by analysts.

However, a tight clustering of price targets, which is represented by a low standard deviation, indicates that analysts have a high degree of agreement about the direction and magnitude of a stock's price movement. While that doesn't necessarily mean the stock will hit the average price target, it could be a good starting point for further research aimed at identifying the potential fundamental driving forces.

That said, while investors should not entirely ignore price targets, making an investment decision solely based on them could lead to disappointing ROI. So, price targets should always be treated with a high degree of skepticism.

Here's Why There Could be Plenty of Upside Left in JAZZ

There has been increasing optimism among analysts lately about the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher. And that could be a legitimate reason to expect an upside in the stock. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

The Zacks Consensus Estimate for the current year has increased 6.4% over the past month, as seven estimates have gone higher compared to no negative revision.

Moreover, JAZZ currently has a Zacks Rank #2 (Buy), which means it is in the top 20% of more than the 4,000 stocks that we rank based on four factors related to earnings estimates. Given an impressive externally-audited track record, this is a more conclusive indication of the stock's potential upside in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here

Therefore, while the consensus price target may not be a reliable indicator of how much JAZZ could gain, the direction of price movement it implies does appear to be a good guide.

Zacks Investment Research

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

Collegium Pharmaceutical (COLL) is a stock many investors are watching right now. COLL is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. COLL has a P/S ratio of 1.69. This compares to its industry's average P/S of 3.29.

Finally, investors will want to recognize that COLL has a P/CF ratio of 5.51. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 10.45. Within the past 12 months, COLL's P/CF has been as high as 8.61 and as low as 5.26, with a median of 6.44.

Another great Medical - Drugs stock you could consider is Jazz Pharmaceuticals (JAZZ), which is a # 2 (Buy) stock with a Value Score of A.

Jazz Pharmaceuticals is trading at a forward earnings multiple of 5.87 at the moment, with a PEG ratio of 0.84. This compares to its industry's average P/E of 58.22 and average PEG ratio of 2.36.

JAZZ's Forward P/E has been as high as 6.87 and as low as 4.97, with a median of 5.62. During the same time period, its PEG ratio has been as high as 1.44, as low as 0.64, with a median of 1.07.

Jazz Pharmaceuticals sports a P/B ratio of 1.88 as well; this compares to its industry's price-to-book ratio of 1.35. In the past 52 weeks, JAZZ's P/B has been as high as 2.27, as low as 1.59, with a median of 1.89.

These are only a few of the key metrics included in Collegium Pharmaceutical and Jazz Pharmaceuticals strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, COLL and JAZZ look like an impressive value stock at the moment.

Zacks Investment Research

Novavax NVAX incurred a third-quarter 2024 loss of 76 cents per share, narrower than the Zacks Consensus Estimate of a loss of 87 cents. In the year-ago quarter, the company reported a loss of $1.26 per share.

Revenues in the quarter amounted to $85 million, which beat the Zacks Consensus Estimate of $57 million. However, the top line declined 55% on a year-over-year basis.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

More on NVAX’s Earnings

Novavax recorded $38.2 million in product sales compared with $2.2 million in the year-ago quarter. This upside was primarily driven by sales of the company’s protein-based COVID-19 vaccine, also the company’s sole marketed product, in the United States.

While the reported figure beat our model estimates of $23 million, it missed the Zacks Consensus Estimate of $49 million.

Licensing, royalties and other revenues rose 133% year over year to $46.3 million in the quarter, driven by a combination of activities as part of the recently signed agreement with pharma giant Sanofi SNY for its protein-based COVID-19 vaccine and adjuvant sales.

Starting next year, Sanofi will market the company’s COVID-19 vaccine and also use it to develop novel COVID-19-influenza combination vaccines. As part of this deal, the company received a payment of $570 million from SNY, which includes $70 million in equity investment. NVAX is also eligible to receive milestone payments of up to $700 million and royalties on sales of the COVID-19 vaccine from Sanofi.

Management did not record grant revenues during the quarter. The company reported about $165 million in grant revenues in the year-ago period.

NVAX’s Costs & Cash Balance

In the reported quarter, research and development (R&D) expenses totaled $87 million, down 18% year over year. The downside was caused by a reduction in clinical and manufacturing spending during the quarter.

Selling, general and administrative (SG&A) expenses were down 34% year over year to $71 million, primarily due to management's restructuring activities to reduce costs.

As of Sept. 30, 2024, the company had $924 million of cash and cash equivalents compared with $1.1 billion as of June 30, 2024.

NVAX’s Guidance

For 2024

Novavax expects 2024 total revenues to be in the range of $650-$700 million, down from its previously issued guidance of $700-$800 million. This was likely due to lower COVID-19 vaccine uptake in ex-U.S. markets.

This revised guidance includes nearly $475 million in licensing, royalties and other revenues. This includes $450 million of revenue recognition associated with the $500 million upfront payment from the Sanofi agreement and the rest in royalty and other revenues from partner-related activities.

It expects full-year product revenue guidance of $175-$225 million, down from the earlier projection of $275-$375 million.

Post the earnings release, Novavax’s share price fell 6% on Tuesday likely due to the curtailed guidance. Year to date, the stock has surged 76.2% against the industry’s 0.9% decline.