Is Collegium Pharmaceutical (COLL) a Great Value Stock Right Now?

Have you assessed how the international operations of Jazz Pharmaceuticals (JAZZ) performed in the quarter ended September 2024? For this drugmaker, possessing an expansive global footprint, parsing the trends of international revenues could be critical to gauge its financial resilience and growth prospects.

In today's increasingly interconnected global economy, a company's ability to tap into international markets can be a pivotal factor in shaping its overall financial health and growth trajectory. For investors, understanding a company's reliance on overseas markets has become increasingly crucial, as it offers insights into the company's sustainability of earnings, ability to tap into diverse economic cycles and overall growth potential.

International market involvement serves as insurance against economic downturns at home and enables engagement with economies that are growing more quickly. Still, this move toward diversification is not without its challenges, as it involves navigating through the fluctuations of currencies, geopolitical threats, and the distinctive nature of various markets.

Upon examining JAZZ's recent quarterly performance, we noticed several interesting patterns in the revenue generated from its international segments, which are commonly analyzed and observed by Wall Street experts.

The recent quarter saw the company's total revenue reaching $1.05 billion, marking an improvement of 8.5% from the prior-year quarter. Next, we'll examine the breakdown of JAZZ's revenue from abroad to comprehend the significance of its international presence.

Decoding JAZZ's International Revenue Trends

During the quarter, All other regions contributed $23.98 million in revenue, making up 2.27% of the total revenue. When compared to the consensus estimate of $22.42 million, this meant a surprise of +6.97%. Looking back, All other regions contributed $17.07 million, or 1.67%, in the previous quarter, and $18.59 million, or 1.91%, in the same quarter of the previous year.

Of the total revenue, $77.32 million came from Europe during the last fiscal quarter, accounting for 7.33%. This represented a surprise of -1.84% as analysts had expected the region to contribute $78.77 million to the total revenue. In comparison, the region contributed $82.16 million, or 8.02%, and $68.97 million, or 7.09%, to total revenue in the previous and year-ago quarters, respectively.

International Revenue Predictions

It is projected by analysts on Wall Street that Jazz will post revenues of $1.07 billion for the ongoing fiscal quarter, an increase of 5.5% from the year-ago quarter. The expected contributions from All other regions and Europe to this revenue are 2.3% and 7.8%, translating into $24.09 million and $83.62 million, respectively.

For the full year, the company is projected to achieve a total revenue of $4.04 billion, which signifies a rise of 5.5% from the last year. The share of this revenue from various regions is expected to be: All other regions at 2.1% ($85.99 million) and Europe at 7.8% ($315.9 million).

The Bottom Line

The dependency of Jazz on global markets for its revenues presents a mix of potential gains and hazards. Thus, monitoring the trends in its overseas revenues can be a key indicator for predicting the firm's future performance.

In a world where international interdependencies and geopolitical conflicts are ever-increasing, Wall Street analysts closely monitor these trends for companies having international presence to adjust their earnings forecasts. Of course, there are several other factors, including a company's standing within its home borders, that influence analysts' earnings forecasts.

At Zacks, a company's changing earnings outlook is given considerable attention due to its proven, strong influence on a stock's price performance in the near term. The connection here is straightforward and positive: when earnings estimates are revised upward, the stock price generally follows suit, increasing as well.

The Zacks Rank, our proprietary stock rating mechanism, demonstrates a notable performance history confirmed through external audits. It effectively utilizes the power of earnings estimate revisions to act as a predictor of a stock's price performance in the near term.

Jazz currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here

Jazz's Recent Stock Market Performance

The stock has increased by 13.6% over the past month compared to the 4.4% rise of the Zacks S&P 500 composite. Meanwhile, the Zacks Medical sector, which includes Jazz, has decreased 1.4% during this time frame. Over the past three months, the company's shares have experienced a gain of 11.4% relative to the S&P 500's 13.1% increase. Throughout this period, the sector overall has witnessed a 2% decrease.

Zacks Investment Research

Investors in Collegium Pharmaceutical, Inc. COLL need to pay close attention to the stock based on moves in the options market lately. That is because the Dec 20, 2024 $20 Put had some of the highest implied volatility of all equity options today.

What is Implied Volatility?

Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.

What do the Analysts Think?

Clearly, options traders are pricing in a big move for Collegium Pharmaceutical shares, but what is the fundamental picture for the company? Currently, Collegium Pharmaceutical is a Zacks Rank #2 (Buy) in the Medical - Drugs industry that ranks in the Top 30% of our Zacks Industry Rank. Over the last 60 days, the Zacks Consensus Estimate for the current quarter has moved from $1.66 per share to $1.67 in that period.

Given the way analysts feel about Collegium Pharmaceutical right now, this huge implied volatility could mean there’s a trade developing. Oftentimes, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.

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Zacks Investment Research