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NovoCure Q3 Earnings: Buying Soaring NasdaqGS:NVCR Stock Before Call?

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NovoCure Limited (NasdaqGS:NVCR) is scheduled to report Q3 earnings results before markets open for trading on October 29, 2020.

The company is expected to report earnings of $0.04/share on revenue of $120 million. The consensus earnings per share (EPS) of $0.04/share is based on a poll of 8 analysts and represents a growth in eps of 96.2% over the same quarter last year, when the company reported earnings of $0.02/share.

The revenue forecast of $120 million based on a poll of 9 analysts implies a year-over-year (YoY) growth in revenue of 30.4%. Last year the company reported $92.062 million in revenue for the quarter.

Expected to report EPS growth of 96.2% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $120.02 $92.06 30.4%
EPS $0.04 $0.02 96.2%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 7 tracked quarters, and missed 1 quarter.

What are your expectations from NovoCure Limited for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.01 $0.02 287.6% Beat
Q1, 2020 $0.03 $0.04 17.6% Beat
Q4, 2019 $0 $0.04 900.0% Beat
Q3, 2019 -$0.04 $0.02 154.9% Beat
Q2, 2019 -$0.06 -$0.01 84.4% Beat
Q1, 2019 -$0.15 -$0.13 11.2% Beat
Q4, 2018 -$0.13 -$0.17 -29.5% Missed
Q3, 2018 -$0.14 -$0.13 7.7% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 11.5%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 30, 2020 $68 $75.79 11.5% Increase
April 30, 2020 $73.54 $60.48 −17.8% Decline
February 27, 2020 $79.45 $72.75 −8.4% Decline
October 31, 2019 $74.27 $75.36 1.5% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.17, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.17 implies a 1.5% chance of earnings manipulation.

Fundamentals And Technical Analysis

NovoCure Limited is currently trading at $121.50/share, down −1.8% for the day. The company is trading at approximately 86.2% of its 52-week high of $140.89/share. The company’s stock price is up 60.3% since the last earnings report and down −7.9% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 54.58 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:NVCR Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 1,041.16 and a forward P/E multiple of 829.05.

NovoCure Limited’s current share price also implies a price-to-book (P/B) multiple of 45.86. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $121.50
P/E Ratio 1,041.2x
P/E Ratio (Fwd) 829.1x
PEG Ratio 8.4
Total Debt / Total Capital 1.3%
Levered Free Cash Flow $24.377 million
EV / EBITDA 816.0x

Finbox

NovoCure Limited is a large-cap stock with a market capitalization of $12.283 billion and a total enterprise value of $12.099 billion. The company operates in the Healthcare sector and the Healthcare Equipment & Supplies industry.

NovoCure Limited, an oncology company, engages in the development, manufacture, and commercialization of Optune for the treatment of a variety of solid tumors. The company markets Optune and NovoTTF-100L, a Tumor Treating Fields delivery system for use as a monotherapy treatment for adult patients with glioblastoma. It is also developing products that are in Phase 2 pilot and Phase 3 pivotal trials for brain metastases, non-small cell lung cancer, pancreatic cancer, ovarian cancer, liver cancer, and mesothelioma. The company markets its products in the European Union, Japan, and internationally. It has a clinical trial collaboration agreement with MSD to evaluate tumor treating fields together with KEYTRUDA, an anti-PD-1 therapy. NovoCure Limited was founded in 2000 and is based in Saint Helier, Jersey.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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