Incyte stock tumbled Tuesday after topping December-quarter expectations, while fellow medical stock Haemonetics followed suit, diving despite reporting beat-and-raise earnings.
The earnings reports sent the two stock lower as they joined their peers in the downtrodden biotech and medical equipment industry groups.
Incyte stock was rocked by confusion over gross/net calculations for its dermatology drug Opzelura, RBC Capital Markets analyst Brian Abrahams said in a note to clients. Shares skidded 4% to close at 80.96 on the stock market today. That pushed Incyte stock further below a buy point at 84.68 out of a flat base, MarketSmith.com shows.
Haemonetics stock toppled 5.9% to 82.57 on slowing organic growth sales. Shares closed within the 5% chase zone of a cup base entry at 86.68 on Monday.
Incyte Stock: Jakafi Beats Expectations
During the fourth quarter, adjusted Incyte earnings rocketed 520% to 62 cents a share and beat expectations for 57 cents, according to FactSet. Sales came in at $926.7 million, up 7.4% and above forecasts for $878.3 million.
Revenue from Incyte's Jakafi climbed 9% to $647.5 million, north of Incyte stock analysts' projections for $633 million to $634 million, Piper Sandler analyst Christopher Raymond said in a note to clients. Jakafi treats two cancers of the blood and bone marrow, as well as graft-versus-host disease, the latter of which occurs when the body rejects a transplant.
Incyte sells the same medicine as a cream called Opzelura for skin conditions. Opzelura brought in $61.3 million in sales, above expectations that ranged from $57 million to $60.6 million. In the year-earlier period, Opzelura generated just $4.67 million in sales.
For the year, Incyte expects $2.53 billion to $2.63 billion in Jakafi sales. The company also calls for $215 million to $225 million in sales of its other hematology/oncology drugs. Raymond says the Jakafi outlook is in line with forecasts, but the company's view for its other drugs is light.
He kept his overweight rating on Incyte stock.
Opzelura Confusion Hits Shares
Incyte stock took a hit on gross/net calculations for Opzelura, RBC's Abrahams said. During the fourth quarter, Incyte netted 57% of gross sales.
The way Incyte calculates gross-to-net is changing as insurance reimbursement kicks in for Opzelura. That caused some confusion about demand for the drug, Abrahams said.
"The bottom line is that the company is reporting gross/net in a standard way, the discounting metrics are improving as had been hoped, and Opzelura demand appears to be growing," he said. "As such, we believe the weakness on this confusion is unwarranted and presents a buying opportunity."
He retained his outperform rating and 86 price target on Incyte stock.
Haemonetics' Plasma Services Lead
Meanwhile, Haemonetics said its fiscal third-quarter sales popped 18% to $305 million. On an organic basis, sales surged 21%. Adjusted profit ticked 1.2% higher to 85 cents a share. But Needham analyst Mike Matson said organic sales growth slowed from 27% in the fiscal second quarter.
Overall, the provider of blood and plasma supplies and services topped analysts' expectations. According to FactSet, Wall Street predicted adjusted Haemonetics earnings of 82 cents a share and $299.6 million in sales.
The best sales growth came from Haemonetics' plasma services, which surged 40.4% to $135.5 million on a strict, as-reported basis. Revenue from supplies to hospitals grew more than 11% to $91.6 million. But blood center sales came in at $73.4 million, down 3.1%.
Notably, Matson said in a report, the plasma business saw a strong recovery with 42% organic sales growth, and Haemonetics signed an extended contract to provide plasma to CSL Plasma until December 2025.
Haemonetics raised its most elements of its outlook for fiscal year 2023. Now, it expects total revenue to climb 18-20% organically. The company predicts 35%-40% growth from plasma sales, but a 2%-4% slide for its blood center revenue. Hospital sales are likely to grow 19%, at the low end of the company's previous outlook for 19%-22% organic sales growth.
Like Incyte stock, Haemonetics shares are highly rated. Incyte has a Relative Strength Rating of 82 out of a best-possible 99. This puts shares in the top 18% of all stocks in terms of 12-month performance, according to IBD Digital. Haemonetics has a stronger RS Rating of 95.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
