Lineage Cell (LCTX) reports a fourth-quarter loss

Lineage Cell (LCTX) came out with a quarterly loss of $0.05 per share versus the Zacks Consensus Estimate of a loss of $0.04. That compares to a year-ago loss of $0.01 per share. These numbers were adjusted for one-time items.

This quarterly report presented an earnings surprise of -25%. A quarter ago, it was expected that this biotechnology company would post a loss of $0.05 per share when it actually produced a loss of $0.05, which was no surprise.

The company has failed to beat consensus EPS estimates over the last four quarters.

Lineage Cell, which belongs to the Zacks Medical – Biomedical and Genetics industry, posted revenues of $1.2 million for the quarter ended December 2021, in line with the Zacks Consensus Estimate. For comparison, revenues from the previous year amounted to USD 0.36 million. Over the last four quarters, the company has topped consensus revenue estimates only once.

The sustainability of the immediate share price movement based on the recently-released numbers and future earnings expectations will mostly depend on management’s commentary on the earnings call.

Lineage Cell shares are down about 42% year to date, compared with the S&P 500 Index’s decline of -10.3%.

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 simple answers to this key question, but one reliable measure that can help investors address this issue is the company’s earnings prospects. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

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 the earnings release, the estimate revision trend for Lineage Cell is: mixed. While the magnitude and direction of estimate revisions may change following the company’s just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) stock. Therefore, the company’s stock is expected to perform in line with the market in the near future. 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 $0.12 on revenue of $29.83 million for the coming quarter and -$0.19 on revenue of $22.32 million for the current fiscal year.

Investors should be aware that the outlook for the industry may also have a significant impact on share prices. In terms of the Zacks Industry Rank, the Medical Biomedical and Genetics industry is currently in the bottom 39% 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.

Another company in the same industry, AVEO Pharmaceuticals (AVEO), has not yet released its results for the quarter ended December 2021. The results are expected to be released on March 14.

The cancer drug company is expected to report a quarterly loss of $0.27 per share in its upcoming report, representing a year-over-year change of +38.6%. The consensus EPS estimate for the quarter has been revised upwards by 2.1% over the last 30 days to the current level.

AVEO Pharmaceuticals’ revenues are expected to be $18.95 million, up 2,028.9% from the year-ago quarter.

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