Rhythm Pharmaceuticals: Poised for an Earnings Beat, But Past Performance Matters
Investors are keenly watching Rhythm Pharmaceuticals (RYTM) as it prepares to release its quarterly earnings report on February 26. While analysts predict a year-over-year decline in earnings alongside higher revenues, the potential for a positive surprise looms large. This article dives into the factors influencing Rhythm’s potential performance, examining analyst revisions, earnings history, and a comparison with a peer in the biomedical and genetics industry, Sarepta Therapeutics (SRPT).
Understanding the Consensus Estimate
The current consensus estimate projects a quarterly loss of $0.79 per share for Rhythm Pharmaceuticals, representing a 9.7% decrease compared to the same period last year. Still, revenue is expected to climb 32.2% to $55.3 million. This divergence – declining earnings on rising revenue – often signals a period of significant investment or changing cost structures within the company.
Analyst Sentiment: A Recent Shift
Over the past 30 days, the consensus EPS estimate has been revised upward by 0.95%. This indicates that analysts are becoming increasingly optimistic about Rhythm’s prospects, likely factoring in recent developments or positive data releases. It’s important to remember that these revisions reflect a collective reassessment of the company’s performance.
The Earnings ESP: A Bullish Signal?
Rhythm Pharmaceuticals currently boasts an Earnings ESP (Expected Surprise Prediction) of +9.30%. This means the Most Accurate Estimate is higher than the Zacks Consensus Estimate, suggesting analysts who’ve recently revised their forecasts are more bullish. A positive Earnings ESP, particularly when combined with a favorable Zacks Rank, historically indicates a higher probability of an earnings beat – with such combinations resulting in a positive surprise nearly 70% of the time.
Zacks Rank and Predictive Power
Currently, Rhythm Pharmaceuticals holds a Zacks Rank of #3 (Hold). While not as strong as a #1 (Strong Buy) or #2 (Buy), the combination of a positive Earnings ESP and a Zacks Rank of 3 still suggests a likely beat. The Zacks Rank system assesses stocks based on factors like earnings estimate revisions and surprise history.
A Appear at Past Performance: A History of Misses
Despite the optimistic signals, Rhythm Pharmaceuticals has struggled to meet or exceed consensus EPS estimates in recent quarters. In the last reported quarter, the company posted a loss of $0.82 per share, missing expectations by 13.89%. This pattern of misses underscores the importance of considering historical performance alongside current estimates.
Sarepta Therapeutics: A Peer Comparison
Sarepta Therapeutics (SRPT), a competitor in the Zacks Medical – Biomedical and Genetics industry, is also scheduled to report earnings. Analysts anticipate a loss of $0.71 per share for Sarepta, a significant year-over-year decline of 147.3%. Revenue is projected to decrease by 38% to $408.53 million. However, Sarepta has an Earnings ESP of +2.11% and a Zacks Rank of #3, also suggesting a potential earnings beat.
What Does This Imply for Investors?
Rhythm Pharmaceuticals appears to be a compelling candidate for an earnings beat, driven by recent analyst revisions and a positive Earnings ESP. However, investors should remain cautious, considering the company’s history of missing estimates. A comprehensive assessment of the earnings report, including management’s commentary on business conditions, is crucial for determining the sustainability of any price movement.
Frequently Asked Questions
- What is the Zacks Earnings ESP? The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, indicating potential deviation from expectations.
- What does a Zacks Rank of #3 mean? A Zacks Rank of #3 signifies a Hold rating, suggesting a neutral outlook for the stock.
- When is Rhythm Pharmaceuticals’ earnings release date? Rhythm Pharmaceuticals is expected to release its earnings on February 26.
- Has Rhythm Pharmaceuticals consistently met earnings expectations? No, the company has missed consensus EPS estimates in each of the last four quarters.
Pro Tip: Don’t rely solely on earnings estimates. Consider broader market trends, industry dynamics, and company-specific news when making investment decisions.
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Rhythm Pharmaceuticals, Inc. (RYTM): Free Stock Analysis Report
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