Categories Analysis, Earnings, Health Care

Earnings preview: Market has low expectations ahead of Advaxis’ Q3 report

Advaxis (NASDAQ: ADXS), a late-stage biotech firm, is one of the worst-performing healthcare stocks that continuously disappointed investors over the years. Though the company returned to profitability briefly at the beginning of the year, after a long losing streak, it could not sustain the momentum.

Advaxis’ third-quarter results are tentatively scheduled for release on September 9 at 4:05 pm ET, which will be reconfirmed by the management ahead of the announcement.

Market has low expectations ahead of Advaxis' Q3 report
Image for representation only. Courtesy: Chokniti Khongchum (Pexels)

Currently, Wall Street analysts predict a loss of $1.32 per share for the third quarter, which represents a marked improvement from the year-ago period when the company posted a loss of $4.05 per share. The estimated improvement can be attributed to the management’s cost-cutting efforts. There is no estimate for the top-line.

Value Erosion

Recently, investors were left speculating about the company’s market value after the stock dropped below one dollar, hitting a record low. The sentiment had turned sour after the company terminated a high-profile contract and returned prepayments to customers.

Related: Advaxis Q2 2019 Earnings Conference Call Transcript

After spending heavily on drug development and clinical trials for long, without any successful product launch, Advaxis is under severe pressure to deliver and come up with financially viable products in its specialized area of immunotherapy.

Cost Pressure

High costs continue to be the main drag on the bottom-line, besides the weak revenue performance. With many development projects in the pipeline, operating costs are expected to remain high in the near future. It is feared that the company might end up exhausting its resources, in the absence of a reliable revenue source, spurring a financial crisis. As of now, the chances of the near-time turnaround look bleak and there is high caution among investors with regard to the stock’s performance.

Q2 Outcome

For the second quarter, Advaxis reported a loss of $1.59 per share, narrower than the $4.03 per share loss recorded a year earlier. The improvement was the result of a sharp decline in research and development expenses. While announcing the results, the management expressed hope that the ongoing immunotherapy clinical trials in multiple cancer drugs would yield positive results.

Also read: What next for healthcare stocks

Advaxis shares have lost consistently in the past several years and slipped to an all-time low earlier this year. The stock has declined more than 90% this year alone.

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