Why is Alkermes (ALKS) down 2.7% since its last earnings report?

A month has passed since the last earnings report for Alkermes (ALKS). Shares have lost about 2.7% in that time, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Alkermes 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 better understand the important catalysts.

Alkermes’ first-quarter earnings and revenues are below estimates

Alkermes reported adjusted earnings from continuing operations of 44 cents per share for the first quarter of 2024, missing the Zacks Consensus Estimate of 59 cents. During the same quarter last year, the company saw adjusted earnings per share of $18 per share.

Alkermes’ revenues of $350.4 million increased 21.8% from the previous quarter thanks to strong performance of its own products. The top line, however, missed the Zacks Consensus Estimate of $360 million.

Quarter in detail

Alkermes earns revenues from net sales of its own products – Vivitrol, Aristada and Lybalvi – and manufacturing revenues and/or royalties from net sales of products commercialized by its partners.

Sales of its own drug Vivitrol increased about 1% year-over-year to $97.7 million due to the stability of its alcohol addiction indications. This figure excludes the Zacks Consensus Estimate of $99 million and our model’s estimate of $102.6 million.

Aristada sales declined 1.5% year-over-year to $78.9 million due to a significant decline in channel inventory. This figure excludes the Zacks Consensus Estimate of $81 million and our model’s estimate of $84.4 million.

Lybalvi generated sales of $57 million, up 50% year-over-year, primarily due to increased demand. Lybalvi’s sales slightly beat the Zacks Consensus Estimate and our model’s estimate of $56.7 million.

Total manufacturing and royalty revenue increased 60.4% year-over-year to $116.8 million, driven by the reinstatement of royalties on sales of Invega’s long-acting products in the United States.

Manufacturing and royalty revenues related to Biogen’s multiple sclerosis drug Vumerity increased 8.3% year over year to $31.3 million. Invega product royalty revenue was $62.7 million in the first quarter, compared to $13.6 million reported in the year-ago quarter.

Research and development expenses were $67.6 million, up nearly 6% year-over-year, driven by higher investments in the ALKS 2680-related pipeline development program.

Selling, general and administrative expenses were $179.7 million, up 7.1% year-over-year, driven by continued investments related to the launch of Lybalvi.

As of March 31, 2024, Alkermes had cash and cash equivalents of $807.8 million compared to $813.4 million as of December 31, 2023.

Guidelines 2024

Alkermes maintained its revenue guidance presented earlier this year.

The company continues to expect total 2024 revenue in the range of $1.5 billion to $1.6 billion.

Vivitrol is expected to have net sales of $410 million to $430 million. Aristada’s sales are expected to be between $340 million and $360 million. Lybalvi’s net sales are expected to be between $275 million and $295 million.

Research and development spending is expected to range from $225 million to $255 million. Selling, general and administrative expenses are expected to be between $625 million and $655 million.

How have estimates changed since then?

Over the last month, investors have seen a downward trend in estimate revisions.

VGM results

Currently, Alkermes has a solid Growth Score of B, although it lags slightly behind its Momentum Score of C. However, the stock is rated A for Value, ranking in the top 20% for this investment strategy.

Overall, the company’s Total VGM Score is A. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company are generally on a downward trend, and the magnitude of these revisions indicates a downward shift. Notably, Alkermes carries a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

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