Aided by the rise in the sales of bone marrow disorder drug Jakafi (ruxolitinib), the pharmaceutical company Incyte Corporation (NASDAQ: INCY) reported a 270.6% increase in the fiscal 2016 second-quarter earnings, compared to last year. The earnings also surpassed the Zacks estimate by a margin of $0.20 per share.
Considering the rise in the fiscal 2016 revenue guidance for the drug Jakafi, we believe that the share price will remain in a bullish orbit in the current quarter. The shares of Incyte ended Wednesday at $83.49.
The Wilmington, Delaware-based company reported second-quarter revenue of $246.29 million, compared to $162.98 million in the similar period of 2015. Incyte’s second-quarter revenue was above Thomson Reuter’s estimate of $231 million.
The revenue from the Products increased to $212.11 million, from $142.41 million last year. The revenue from Product royalty grew to $25.96 million, from $17.36 million in 2015. The Contract revenues were $8.21 million, compared to $3.21 million in the prior year’s similar period. During the second quarter, the sales of Jakafi touched $208 million, up 46% from the second quarter last year.
For the quarter ended June 2016, the company posted an increase in the net income to $34.43 million or $0.18 per share, from $9.29 million or $0.05 per share in the second quarter of 2015. The Q2 2016 earnings surpassed the Zacks estimate of -$0.02 per share.
For fiscal 2016, Incyte raised its sales guidance for the drug Jakafi, while reaffirming the revenue outlook for the drug Inclusig. The company now anticipates Jakafi’s fiscal 2016 sales revenue to be between $825 million and $835 million, compared to prior estimates of $815 million to $830 million.
Incyte also reaffirmed Iclusig’s fiscal 2016 revenue guidance in the range of $25 million to $30 million. The company also anticipates a decline in the full year 2016 research and development expenses to a range of $620 million to $630 million, from the previous estimate of $635 million to $660 million.
The forecast for the SGA (Selling, general, and administrative) expenses remains unchanged in the range of $285 million to $310 million. Considering the phenomenal growth in the earnings and raise in Jakafi’s fiscal 2016 sales outlook, fundamentally, the share price can be expected to remain strong in the third quarter.
Earlier this week, the stock tested and bounced off the 50-day moving average of 84. The chart also indicates major support for the stock at 77. Minor resistance exists at 87 levels. The MACD does not show any signs of weakness in the scrip. Thus, we can expect the stock to break above the minor resistance to reach the next hurdle at 95 levels.
So, considering the probability of an upside in the share price, we recommend purchasing a one-touch call option with a strike price of about $90. The binary trader can also opt for a contract expiry date in the second week of September.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
