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Q3 Earnings Preview for Incyte (NasdaqGS:INCY)

in EARNINGS/INVESTING IDEAS by

Incyte Corporation (NasdaqGS:INCY) is scheduled to report Q3 earnings results on November 5, 2020.

The company is expected to report earnings of $0.76/share on revenue of $622.5 million. The consensus earnings per share (EPS) of $0.76/share is based on a poll of 13 analysts and represents a decline in eps of −7.7% over the same quarter last year, when the company reported earnings of $0.82/share.

The revenue forecast of $622.5 million based on a poll of 17 analysts implies a year-over-year (YoY) growth in revenue of 12.9%. Last year the company reported $551.6 million in revenue for the quarter.

Expected to report EPS contraction of −7.7% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $622.48 $551.58 12.9%
EPS $0.76 $0.82 −7.7%

Earnings Call Trends

Historically, management has exceeded analyst expectations 5 out of the last 8 tracked quarters, and missed expectations 3 quarters.

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

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.86 $1.24 43.7% Beat
Q1, 2020 -$2.80 -$2.86 -2.2% Missed
Q4, 2019 $0.58 $0.65 12.8% Beat
Q3, 2019 $0.64 $0.82 28.2% Beat
Q2, 2019 $0.50 $0.75 50.9% Beat
Q1, 2019 $0.41 $0.62 49.5% Beat
Q4, 2018 $0.49 $0.40 −17.8% Missed
Q3, 2018 $0.41 $0.38 −6.2% Missed

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 falling −4.1%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 4, 2020 $101.79 $97.62 −4.1% Decline
May 5, 2020 $100.99 $96.08 −4.9% Decline
February 13, 2020 $75.83 $78.45 3.5% Increase
October 29, 2019 $79.86 $83.66 4.8% 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 −1.28, the model suggests that the company is likely an earnings manipulator. A value of −1.28 implies a 10.0% chance of earnings manipulation.

Fundamentals And Technical Analysis

Incyte Corporation is currently trading at $87.39/share, down −1.1% for the day. The company is trading at approximately 79.4% of its 52-week high of $110.36/share. The company’s stock price is down −10.5% since the last earnings report and down −1.4% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 43.70 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:INCY Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −100.21 and a forward P/E multiple of −2,039.09.

Incyte Corporation’s current share price also implies a price-to-book (P/B) multiple of 8.17. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $87.39
P/E Ratio −100.2x
P/E Ratio (Fwd) −2,039.1x
PEG Ratio 0.6
Total Debt / Total Capital 0.4%
Levered Free Cash Flow -$107.6 million
EV / EBITDA −131.8x

Finbox

Incyte Corporation is a large-cap stock with a market capitalization of $19.322 billion and a total enterprise value of $17.808 billion. The company operates in the Healthcare sector and the Biotechnology industry.

Incyte Corporation, a biopharmaceutical company, focuses on the discovery, development, and commercialization of various therapeutics in the United States. The company offers JAKAFI, a drug for the treatment of myelofibrosis and polycythemia vera cancers; and Iclusig, a kinase inhibitor to treat chronic myeloid leukemia and philadelphia-chromosome positive acute lymphoblastic leukemia. Its clinical stage products include ruxolitinib, a drug in Phase III clinical trial for steroid-refractory chronic graft-versus-host-diseases (GVHD); and Phase II trial for the treatment of essential thrombocythemia and refractory myelofibrosis. In addition, the company engages in the development of itacitinib, which is in Phase III clinical trial to treat naïve chronic GVHD; and pemigatinib that is in Phase II clinical trial for treating bladder cancer, cholangiocarcinoma, 8p11 myeloproliferative syndrome, and Tumor agnostic. Further, it is involved in developing Parsaclisib, which is in Phase II clinical trial for follicular lymphoma, marginal zone lymphoma, and mantel cell lymphoma. Additionally, the company develops INCMGA0012 that is in Phase II clinical trials for MSI-high endometrial cancer, merkel cell carcinoma, and anal cancer, as well as in Phase II clinical trials non-small cell lung cancer. It has collaboration agreements with Novartis International Pharmaceutical Ltd.; Eli Lilly and Company; Agenus Inc.; Merus N.V.; Calithera Biosciences, Inc; MacroGenics, Inc.; Merus N.V.; MorphoSys AG; Syros Pharmaceuticals, Inc.; Innovent Biologics, Inc.; and Zai Lab Limited. The company was founded in 1991 and is headquartered in Wilmington, Delaware.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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