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Jazz (JAZZ) Up 0.4% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Jazz Pharmaceuticals (JAZZ). Shares have added about 0.4% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Jazz due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Q4 Earnings and Sales Miss Estimates

Jazz Pharmaceuticals reported an adjusted loss of 7 cents per share in fourth-quarter 2022, missing the Zacks Consensus Estimate for earnings of 51 cents. In the year-ago quarter, Jazz reported earnings of $4.21 per share.

Total revenues in the reported quarter rose 8.4% year over year to $972.1 million. The upside was driven by sales of new drugs and drugs added from the acquisition of GW Pharmaceuticals. Total revenues, however, slightly missed the Zacks Consensus Estimate of $972.7 million.

Net product sales increased 8.4% from the year-ago quarter’s levels to $967.5 million. Royalties and contract revenues were up 19.5% to $4.6 million in the quarter.

Neuroscience Products

Sales of Jazz’s neuroscience products increased 8.0% to $740.6 million.

Net product sales for the combined oxybate business (Xyrem + Xywav) increased 12% to $528.9 million in the quarter. During the quarter, average active oxybate patients rose 11% year over year to approximately 18,000.

Sales of the sleep disorder drug Xyrem declined 14.0% year over year to $247.5 million due to patients switching to Xywav. Earlier this January, an authorized generic version of Xyrem was launched and management expects more generic launches later this year.

Xywav, a low-sodium formulation of Xyrem, recorded sales of $281.4 million in the quarter, up 54.0% year over year and 9.9% sequentially. The upside can be attributed to the encouraging uptake of the drug in narcolepsy and idiopathic hypersomnia (IH) indications. Following the fourth-quarter results, Xywav became Jazz’s largest product by net sales.

Sales of the epilepsy drug Epidiolex/Epidyolex rose 7% to $207.0 million. The drug was added to Jazz’s pipeline with the GW Pharmaceuticals’ acquisition in 2021. Jazz is making significant progress related to the launch of Epidyolex in Europe and other ex-U.S. markets.

Another drug added with the GW Pharma acquisition was Sativex, a cannabis-based mouth spray for multiple sclerosis-related spasticities, approved in Europe but not in the United States. The drug recorded sales of $4.7 million in the quarter, up 1.5% year over year.

Oncology Products

Oncology product sales increased 8.0% to $223.9 million.

New drug Rylaze recorded sales of $81.0 million in the quarter, up 25% year over year and 10.1% sequentially. Jazz stated that demand remained strong during the quarter. Rylaze is only approved in the United States for treating ALL and LBL patients. A regulatory application seeking approval for this ALL drug was filed in Europe in May 2022.

Zepzelca, approved for small cell lung cancer, recorded sales worth $72.0 million in the quarter, up 11% year over year. Per management, the drug continued to be the treatment of choice in the second-line SCLC setting.

Acute myeloid leukemia drug, Vyxeos, generated sales of $30.3 million, down 12.9% from the year-ago period’s levels.

Defitelio sales were down 4.4% year over year at $40.7 million in the quarter.

Cost Discussion

Adjusted selling, general and administrative (SG&A) expenses were down 2.7% to $319.8 million due to lower Sunosi-related costs.

Adjusted research and development (R&D) expenses rose 14.3% to $160.1 million, mainly due to support for the increased costs for developing pipeline candidates.

2023 Guidance

The company expects 2023 adjusted earnings in the range of $16.90 - $17.85 per share.

Total revenues are expected to be in the range of $3.68-$3.88 billion, suggesting approximately 3% year-over-year growth at the midpoint compared with 2022 levels. In 2023, Jazz expects continued growth in net sales of Xywav, Epidiolex and its oncology portfolio.

Neuroscience sales are expected in the range of $2.68-$2.83 billion, implying flat year-over-year growth at the midpoint compared to 2022. The Oncology franchise is expected to record sales in the range of $0.95-$1.05 billion, indicating growth of 14.4% at the midpoint compared to 2022.

While adjusted SG&A expenses are anticipated between $1.05 billion and $1.11 billion, adjusted R&D expenses are expected to be in the band of $675 million to $725 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

The consensus estimate has shifted -6.14% due to these changes.

VGM Scores

Currently, Jazz has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 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 upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Jazz 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

Jazz is part of the Zacks Medical - Drugs industry. Over the past month, Corcept Therapeutics (CORT), a stock from the same industry, has gained 10.6%. The company reported its results for the quarter ended December 2022 more than a month ago.

Corcept reported revenues of $103.06 million in the last reported quarter, representing a year-over-year change of +4.3%. EPS of $0.14 for the same period compares with $0.26 a year ago.

For the current quarter, Corcept is expected to post earnings of $0.22 per share, indicating a change of +10% from the year-ago quarter. The Zacks Consensus Estimate has changed -18.4% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Corcept. Also, the stock has a VGM Score of D.

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