Lineage Cell (LCTX) reports a third-quarter loss, missing revenue estimates

Lineage Cell (LCTX) came out with a quarterly loss of $0.04 per share compared to the Zacks Consensus Estimate of a loss of $0.03. For comparison, a year ago the loss was $0.05 per share. These numbers have been adjusted for one-off items.

This quarterly report presented an earnings surprise of -33.33%. A quarter ago, it was expected that this biotech company would post a loss of $0.03 per share when it actually produced a loss of $0.04, delivering a surprise of -33.33%.

The company has failed to beat consensus earnings per share estimates over the past four quarters.

Lineage Cell, which belongs to the Zacks Medical – Biomedical and Genetics industry, posted revenues of $3 million for the quarter ended September 2022, missing the Zacks Consensus Estimate by 26.97%. This compares to the prior-year revenues of $2.27 million. The company has not been able to beat the consensus revenue estimates over the last four quarters.

The sustainability of the stock’s current price movement based on recently-released numbers and future earnings expectations will primarily depend on management’s commentary following the earnings conference call.

Lineage Cell shares have lost about 49% since the beginning of the year, while the S&P 500 is down -21.4%.

What’s next for Lineage Cell?

While Lineage Cell has underperformed the market so far this year, the question that comes to investors’ minds is: what’s next for the stock?

There are no easy answers to this key question, but one reliable metric that can help investors address this issue is the company’s earnings outlook. This includes not only the current consensus earnings expectations for the coming quarters, but also how those expectations have changed recently.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings report, the estimate revision trend for Lineage Cell is mixed. While the magnitude and direction of estimate revisions could change following the company’s just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. As such, the stock is expected to perform in line with the market in the near term. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the next quarters and the current fiscal year change in the coming days. The current consensus EPS estimate is -$0.04 on revenue of $5.26M for the coming quarter and -$0.16 on revenue of $16.13M for the current fiscal year.

Investors should be aware that the outlook for the industry can also have a significant impact on stock performance. In terms of the Zacks Industry Rank, Medical – Biomedical and Genetics currently ranks in the top 28% of the 250+ Zacks industries. Our research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Yet another company from the same industry, Celularity, Inc. (CELU), has not yet reported its results for the quarter ended September 2022.

The company is expected to report a quarterly loss of $0.26 per share in its upcoming report, which would represent a year-over-year change of -165%. The consensus earnings per share estimate for the quarter remained unchanged over the past 30 days.

Celularity, Inc. revenue is expected to be $5.29 million, down 50.2% from the prior-year quarter.

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