Halozyme Therapeutics (HALO) Up 19.8% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Halozyme Therapeutics (HALO). Shares have added about 19.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Halozyme Therapeutics due for a pullback? 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 drivers.

Halozyme Q1 Earnings & Sales Miss Estimates

Halozyme reported first-quarter 2022 adjusted earnings of 47 cents per share (excluding stock-based compensation expense), which missed the Zacks Consensus Estimate of 48 cents. The company’s earnings were 37 cents per share in the year-ago period.

Total revenues increased 31.8% year over year to $117.3 million, primarily driven by strong royalty payments, partially offset by lower revenues under collaboration agreements. The top line, however, missed the Zacks Consensus Estimate of $126.91 million.

Quarterly Highlights

Halozyme’s top line comprises product sales, royalties and revenues under collaborative agreements.

Royalty revenues were $69.6 million in the first quarter, up 88.5% from the year-ago quarter, mainly driven by strong sales uptake of J&J’s subcutaneous Darzalex and to a lesser extent by Roche’s Phesgo. Royalty revenues generated nearly 60% of the total revenues for the company during the first quarter. Robust demand for J&J’s subcutaneous Darzalex, multiple label expansions and continued launches in new territories along with an additional contribution from Roche’s Phesgo are likely to drive Halozyme’s strong royalty revenues.

Product sales, solely from the sale of bulk API to collaborators using the ENHANZE platform for drug development, were $22.1 million in the quarter, up 1.7% from the year-ago quarter. The company supplies API to ENHANZE partners like J&J and Roche.

Revenues under collaborative agreements were $25.5 million, down 15.8% year over year.

Research and development ([R&D] including stock-based compensation) expense increased 31.6% year over year to $11.9 million, mainly due to costs related to merger and acquisition.

Selling, general and administrative (SG&A) expenses (including stock-based compensation) were $13.8 million, up 25.1% from the year-ago period.

2022 Guidance Maintained

Halozyme maintained its guidance for revenues and earnings for 2022 issued last month. The company expects total revenues in 2022 to be between $530 million and $560 million, indicating year-over-year growth of 20.

The company expects revenues from royalties to increase approximately 50% year over year to $300 million on the back of a strong uptake of the subcutaneous formulation of J&J’s Darzalex as well as growth in Roche’s Phesgo. Product sales and collaborative revenues are expected to be flat year over year.

The company expects adjusted earnings to be in the range of $2.05-$2.20 per share (excluding stock-based compensation expense).

In April, HALO announced that it would acquire Antares Pharma for approximately $960 million. The acquisition is expected to be completed by June-end. It will add an industry-leading auto-injector platform as well as a commercial business with three proprietary products to Halozyme’s portfolio. Although the acquisition is expected to be immediately accretive to the top and bottom lines, Halozyme stated that its guidance does not include any impact of the Antares acquisition.

The company expects the Antares acquisition to accelerate top-and bottom-line growth and enhance cash flow generation over the next five years.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month.

The consensus estimate has shifted -6% due to these changes.

VGM Scores

At this time, Halozyme Therapeutics has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile 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

Halozyme Therapeutics has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Halozyme Therapeutics belongs to the Zacks Medical - Biomedical and Genetics industry. Another stock from the same industry, Axsome Therapeutics (AXSM), has gained 7.3% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.

Axsome reported revenues of $0 million in the last reported quarter, representing a year-over-year change of

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