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Why Is Horizon Therapeutics (HZNP) Down 9% Since Last Earnings Report?

A month has gone by since the last earnings report for Horizon Therapeutics (HZNP). Shares have lost about 9% in that time frame, underperforming the S&P 500.

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

Horizon Q1 Earnings and Revenues Miss Estimates

Horizon Therapeutics reported first-quarter 2023 adjusted earnings of 83 cents per share, which missed the Zacks Consensus Estimate of $1.17. The company reported adjusted earnings of $1.34 per share in the year-ago quarter.

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Quarterly revenues of $832 million declined 6% year over year, owing mostly to the seasonal impact on Tepezza sales, which the company typically sees with its infused medicines in the first quarter of each year. Revenues fell short of the Zacks Consensus Estimate of $896 million.

Quarter in Detail

Horizon reported financial results in the single segment, owing to the wind-down of the inflammation business, beginning in the fourth quarter of 2022.

In the unified segment, Tepezza sales construed 48.7% of the net sales amounting to $405.3 million (down 19%), which missed the Zacks Consensus Estimate of $493 million. Per management, the field-force expansion initiated late in 2022 has not yet substantially benefitted net sales.

Krystexxa sales rose 33% year over year to $187 million.

Ravicti sales were $90.3 million in the quarter, up 15% year over year.

Procysbi sales were $50.5 million in the quarter, up 2% year over year.

Uplizna sales were $53.8 million in the quarter, up 77% year over year.

Actimmune sales were $29.1 million in the quarter, down 7% year over year.

Research and development expenses were $134.1 million, up 30% from the year-ago quarter. Selling, general and administrative expenses were $453.4 million, up 21.6% from the year-ago quarter.

The company had cash, cash equivalents and investments worth $2.31 billion as of Mar 31, 2023, compared with $2.35 billion as of Dec 31, 2022.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -9.11% due to these changes.

VGM Scores

At this time, Horizon Therapeutics has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. 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 these revisions indicates a downward shift. Notably, Horizon 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

Horizon Therapeutics is part of the Zacks Medical - Biomedical and Genetics industry. Over the past month, Illumina (ILMN), a stock from the same industry, has gained 1.4%. The company reported its results for the quarter ended March 2023 more than a month ago.

Illumina reported revenues of $1.09 billion in the last reported quarter, representing a year-over-year change of -11.1%. EPS of $0.08 for the same period compares with $1.07 a year ago.

For the current quarter, Illumina is expected to post earnings of $0.03 per share, indicating a change of -94.7% from the year-ago quarter. The Zacks Consensus Estimate has changed -58.1% over the last 30 days.

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

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