Merrimack Pharmaceuticals (MACK) Stock: Collapsing On Earnings

Merrimack Pharmaceuticals Inc (NASDAQ: MACK)

Merrimack Pharmaceuticals is having an incredibly rough day in the market today, and for good reason. The company released its earnings report for the second quarter. Unfortunately, the report was negative. Today, we’ll talk about what we saw from the earnings report, how the stock reacted to the news, and what we can expect to see from MACK moving forward. So, let’s get right to it…

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MACK Reports Troubling Earnings

As mentioned above, Merrimack Pharmaceuticals is having an incredibly rough day in the market today. Here’s what we saw from the report:

  • Earnings Per Share – In terms of earnings, MACK did incredibly poorly in the second quarter. During the quarter, analysts expected that the company would generate a loss of $0.33 per share. However, the company actually announced a far wider loss of $0.40 per share, missing expectations by $0.07 per share.
  • Revenue – While earnings proved to be a big miss, MACK revenue for the quarter came in ahead of expectations. During the second quarter, analysts expected that the company would generate revenue in the amount of $30.97 million. However, the company actually reported that revenue came in at $33.7 million.
  • Expense Guidance – Merrimack Pharmaceuticals also announced that it has reduced its expense guidance for the year 2016. During the year, expenses are expected to be in the range between $243.5 million and $263.5 million. This figure is about $20 million lower than previous guidance. Also, it’s important to remember that the guidance offered with regard to expenses does not include milestone obligations to PharmaEngine.

How The Stock Reacted To The News

As investors, one of the first things that we learn is that the news moves the market. Any time positive news is released with regard to a publicly-traded company, we can expect to see gains in the value of the stock associated with that company. Adversely, when negative news is released, we can expect to see declines. In this particular case, the news that was released was a mix of positive and negative. However, investors can’t seem to look past the miss on earnings. As a result, we’re seeing heavy declines on the stock today. Currently (2:11), the stock is trading at $5.49 per share after a loss of $0.43 per share (7.26%) thus far today.

What We Can Expect To See Moving Forward

Moving forward, I have a relatively mixed expectation of what we can expect to see from MACK. While the poor earnings results are likely to weigh heavy on the stock in the short term, the long-term view looks promising. Currently, the company is in the midst of developing several treatments. Not to mention, it currently has other treatments in collaborations that are nearing milestones, one of which may be a commercialization milestone, which, in the end, will increase collaboration revenue as well. All in all, things are looking good for the long run.

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What Do You Think?

Where do you think MACK is headed moving forward? Join the discussion at TalkTRENDZ.

[Image Courtesy of Wikimedia]

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