Why Is Ironwood (IRWD) Down 3.6% Since Last Earnings Report?
It has been about a month since the last earnings report for Ironwood Pharmaceuticals (IRWD). Shares have lost about 3.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Ironwood due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Ironwood Q1 Earnings and Revenues Miss Estimates
Ironwood reported first-quarter 2020 adjusted earnings of 4 cents per share, which missed the Zacks Consensus Estimate of 11 cents. The company had incurred an adjusted loss of 26 cents in the year-ago quarter.
Total revenues of $79.9 million also missed the Zacks Consensus Estimate of $86.8 million. However, revenues were up 16.3% year over year due to higher sales of Linzess as well as linaclotide API.
Quarter in Detail
As reported by partner Allergan, Linzess net sales totaled 172.2 million in the United States, up 6.7% year over year.
Ironwood's share of net profits from sales of Linzess in the United States (included in collaborative revenues) was $71.4 million in the first quarter, up approximately 11% year over year.
Per data provided by IQVIA, volume of prescribed Linzess capsules in the first quarter increased about 11% year over year.
On its first-quarter earnings call, Ironwood stated that it observed a higher rate of growth in Linzess sales during the last two weeks of the first quarter of 2020, which the company believes was due to stockpiling by patients amid the COVID-19 pandemic.
Sales of linaclotide API were $5.5 million compared with $2.6 million in the year-ago period. Ironwood recorded $3.3 million in linaclotide royalties, co-promotion and other revenues, compared with $1.8 million in the year-ago period.
2020 Guidance
Ironwood stated that the COVID-19 pandemic has not caused significant disruptions in manufacturing operations and supply of Linzess in the United States. However, the extent of future impact is uncertain. Hence, the company withdrew its previous guidance for 2020 except that for adjusted EBITDA.
The company continues to expect adjusted EBITDA to be more than $105 million in 2020.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -50% due to these changes.
VGM Scores
At this time, Ironwood has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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, Ironwood has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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