Why Is Arena Pharmaceuticals (ARNA) Down 10.1% Since Last Earnings Report?

It has been about a month since the last earnings report for Arena Pharmaceuticals (ARNA). Shares have lost about 10.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Arena Pharmaceuticals due for a breakout? 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 catalysts.

Arena Pharmaceuticals Beats on Q4 Earnings & Revenues

Arena Pharmaceuticals reported adjusted loss (excluding income tax benefit) of 82 cents per share in the fourth quarter of 2018, which surpassed the Zacks Consensus Estimate of a loss of 76 cents. The bottom line also improved from a loss of 35 cents incurred in the year-ago peiriod.

Total revenues came in at $8.6 million, down 43.7% from the year-earlier period. However, the top line outpaced the Zacks Consensus Estimate of $3.43 million. Revenues comprised $1.8 million as royalty revenues and $6.9 million as collaboration revenues.

Research & development (R&D) expenses soared 82.9% from the prior-year level to $37.9 million.

General and administrative expenses surged 86.6% from the year-ago level to $15.4 million.

Full-Year Results

Arena reported total revenues of $18 million in 2018, down 15.8% on a year-over-year basis. However, loss per share narrowed to 63 cents compared with $2.77 in the year-ago period.

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 -10.88% due to these changes.

VGM Scores

Currently, Arena Pharmaceuticals has a poor Growth Score of F, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. 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 this revision indicates a downward shift. Notably, Arena Pharmaceuticals has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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