Today's Top Health Care Stocks to Watch: Depomed Inc., Dendreon Corp., and Jazz Pharmaceuticals

Let's take a look at today's top stories in biotech and health care. Keep an eye out for Depomed (NASDAQ: DEPO  ) , Dendreon (NASDAQ: DNDN  ) , and Jazz Pharmaceuticals (NASDAQ: JAZZ  ) . 

Depomed to report first-quarter earnings today
The biopharma world will likely take a keen interest in Depomed's first-quarter earnings report after the company handsomely beat estimates for both earnings and revenue in the previous quarter. Depomed has dramatically raised expectations after last fall selling its interest in royalty and milestone payments for the company's type 2 diabetes franchise to PDLI BioPharma for $240.5 million. That enabled Depomed to double its product portfolio by acquiring new products. Three months ago, Depomed was expected to post a first-quarter loss of $0.10 a share for the first quarter, but the consensus earnings estimate for the first quarter now stands at $0.10 a share on $53.57 million in revenue. What will be particularly important to note are sales of the company's lead pain medication Gralise following its price increase late last year. Gralise is Depomed's most important value driver among its approved products and is expected to see double-digit sales growth for the next couple of years. You should also dig into sales of the company's newly acquired products, Cambia and Lazanda. 

Dendreon's first-quarter earnings are a mixed bag
Dendreon's consensus quarterly loss per share estimate heading into today was $0.28 on $69.19 million in revenue. In its earning release this morning, the company reported a loss per share of $0.24 and revenue of $68.8 million. So Dendreon shrank its loss per share substantially in the quarter compared to the Street's expectations, but sales of the company's prostate cancer treatment Provenge are still lagging, leading to the miss on revenue. 

The Street's consensus for the first quarter was already a 42% reduction in losses year over year. With today's numbers, Dendreon has now reduced its losses by about 50%. However, the shrinking loss per share is mainly the result of cost-saving measures, rather than growing Provenge sales. In fact, analysts only expect Provenge sales in 2014 to grow by a mere 2.4% year over year, and even this marginal growth rate may be difficult to achieve based on today's report. Looking ahead, I expect Provenge sales to continue to struggle in the face of increasing competition in the prostate cancer market. As such, you may want to take a wait and see approach with this one.    

Jazz Pharmaceuticals reports after the bell today
Orphan-drug maker Jazz Pharmaceuticals today is scheduled to report first-quarter earnings after the closing bell. Jazz has been one of the few consistently bright spots among biotech stocks this year, gaining 8.57% year to date. The secret to Jazz's success has been the double-digit sales growth of its lead commercial products Xyrem and Erwinaze. Analysts have pegged Jazz's sales to grow by a healthy 29.9% this year compared to a year ago, so it'll be interesting to see if sales can live up to these high expectations in the first quarter. Turning to the Street's expectations today, consensus for first-quarter earnings per share are $1.79 on $254.86 million in revenue. If Jazz can meet or even exceed these high expectations, there is good reason to believe the stock could continue its upward momentum. Specifically, shares are projected to trade at a forward price-to-earnings ratio of only 13.49, compared to a sector wide price-to-earnings ratio of 25.72. In short, Jazz's rapidly increasing earnings could lift shares higher in the long term. 

Invest in the next wave of health-care innovation
The Economist compares this disruptive invention to the steam engine and the printing press. Business Insider says it's "the next trillion dollar industry." And the technology behind is poised to set off one of the most remarkable health care revolutions in decades. The Motley Fool's exclusive research presentation dives into this technology's true potential, and its ability to make life-changing medical solutions never thought possible. To learn how you can invest in this unbelievable new technology, click here now to see our free report.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2948749, ~/Articles/ArticleHandler.aspx, 7/31/2014 8:28:28 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement