Neos Therapeutics (NEOS) reports second-quarter loss, misses revenue estimates

Neos Therapeutics (NEOS) came out with a quarterly loss of $0.08 per share versus the Zacks Consensus Estimate of a loss of $0.16. For comparison, a year earlier the loss was $0.52 per share. These numbers have been adjusted for one-off items.

This quarterly report presented an earnings surprise of 50%. A quarter ago, it was expected that this pharmaceutical company would post a loss of $0.22 per share when it actually produced a loss of $0.15, delivering a surprise of 31.82%.

The company has topped consensus EPS estimates three times over the last four quarters.

Neos Therapeutics, which belongs to the Zacks Medical – Drugs industry, posted revenues of $15.64 million for the quarter ended June 2019, missing the Zacks Consensus Estimate by 6.33%. For comparison, revenues from the previous year amounted to $11.36 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.

Neos Therapeutics shares have lost approximately 11.5% since the beginning of the year compared to the S&P 500’s gain of 15%.

What’s next for Neos Therapeutics?

Even though Neos Therapeutics has underperformed the market 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.

Prior to the earnings release, Neos Therapeutics’ estimate revision trend was favorable. 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 #2 (Buy) for the stock. We can therefore expect that the company’s shares will outperform 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 -$0.13 on revenue of $17.70M for the coming quarter and -$0.61 on revenue of $70.10M 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 – Drugs industry is currently in the top 37% 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.

Want the latest recommendations from Zacks Investment Research? Today you can download the top 7 stocks for the next 30 days. Click to get this free report

Neos Therapeutics, Inc. (NEOS): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research