Why Is Arena Pharmaceuticals (ARNA) Up 9.1% Since Last Earnings Report?

It has been about a month since the last earnings report for Arena Pharmaceuticals (ARNA). Shares have added about 9.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Arena Pharmaceuticals 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.

Arena Pharmaceuticals Beats on Q1 Earnings & Revenues

Arena Pharmaceuticals reported earnings of $12.10 per share for the first quarter of 2019, which beat the Zacks Consensus Estimate of $11.43. The company had incurred loss of 80 cents per share in the year-ago quarter. The significant increase in earnings during the quarter was due to an income tax provision of $110 million and revenues of $785.5 million (net of costs) received from United Therapeutics as upfront payment related to sale of ralinepag.

However, excluding the income tax provision and upfront payment, the company recorded an adjusted loss of $1.07 per share.

Arena’s total revenues came in at $801.1 million, including upfront payment of $800 million from United Therapeutics. Revenues included $0.97 million of royalty revenues and $0.08 million of collaboration revenues. In the year-ago quarter, Arena had recorded $1.8 million as collaboration/royalty revenues.The Zacks Consensus Estimate for revenues was pegged at $801 million.

Research & development (R&D) expenses soared 110.4% from the prior-year level to $45.4 million.

General and administrative expenses surged 48.7% from the year-ago level to $16.6 million.

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 -9.32% due to these changes.

VGM Scores

Currently, Arena Pharmaceuticals has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. 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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