Amarin Corporation plc (ADR) (NASDAQ: AMRN)
Amarin released their earnings report as expected today, and unfortunately, the results were anything but expected. As a result, the value of the stock fell hard in morning trading. So below, we’ll do a quick overview of what we saw in the earnings report, talk about how the market reacted, and discuss what we can expect to see moving forward.
Amarin’s Q1 Earnings Details
As mentioned above, Amarin’s earnings report didn’t go quite as analysts expected. The company produced a wide miss in all areas…
- Top Line Revenue – In the quarter, Amarin generated total revenue in the amount of $15.6 million. Missing consensus estimates of $21.86 million by more than $6 million.
- Earnings Per Share – When it comes to earnings per share, the company produced a loss of $0.16; proving to be a 5 cent wider loss than analysts expected.
How The Market Reacted To The News
As you could imagine any time a small-cap biotech company misses earnings this widely, the stock starts to fall. That’s exactly what we saw in early trading today; with AMRN falling more than 8% before 10:00. However, since then, we’ve seen a bit of a recovery; making up more than half of the losses we saw in early trading. Currently (11:23), AMRN is trading at $1.91 per share after a loss of 3.54%.
What We Can Expect To See Moving Forward
When it comes to AMRN, I have two different views; depending on if we are talking about the short term or long term outlook. Here’s how I see it…
- Short Term – As a small-cap biotech stock, we can expect to see short term volatility. It’s just the nature of the beast. Coupled with the fact that earnings and top-line revenue were widely missed in the quarter, I think that it’s possible that we’ll see more declines in the short run. However, in my opinion AMRN isn’t a short term stock. It’s all about the long run for this one…
- Long Term – In the long term, I have a completely different and overwhelmingly positive outlook. When we look at the reasons for the miss, we see severe winter weather, healthcare plan issues, and wholesalers cutting back on days of stock. Two of these issues, I see as very short term. The reality is, it’s not Winter anymore, and not every year will have such severe weather. Considering that sales were low as a result of severe weather, and economic conditions have started to become a concern for many, it’s not surprising that wholesalers would have cut backs here and there. Both of those issues are more short term and will most likely not affect the company much in the long run. As far as health plan issues, this is something that is going to have an affect industry wide. Although it may be a pain now, the medical industry is continuing to adjust and profit, even in the current state of insurance reform. So, while this may affect the company a bit longer than winter weather, I don’t think the affects will be big enough to be concerned with in the long run. Currently, the company is expanding payor coverage of Vascepa; recently contracting coverage at Humana. All in all, we should see prescription growth in the long run.
What Do You Think?
Where do you think AMRN is headed and why? Let us know in the comments below!