The market expects Mallinckrodt (MNK) to deliver a year-over-year decline in earnings on higher revenues when it reports results for the quarter ended September 2019.
Shares of Mallinckrodt (MNK - Free Report) were down 28.3% after it reported second-quarter 2020 results and indicated the possibility of filing for bankruptcy. Mallinckrodt (MNK) is expected to deliver a year-over-year decline in earnings on lower revenues when it reports results for the quarter ended March 2020. BMO Capital Markets reduced their price target on Mallinckrodt from $4.00 to $2.00 and set a “market perform” rating for the company in a research report on Wednesday. Mallinckrodt (MNK) is expected to deliver a year-over-year decline in earnings on lower revenues when it reports results for the quarter ended March 2020. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss.That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. Mallinckrodt is in the midst of a $1.6 billion settlement for its sale of opioids, and is also on the hook for a $650 million bill to Medicaid related to its Acthar Gel product. On the other hand, if they miss, the stock may move lower.While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it's worth having a handicapping insight into the odds of a positive EPS surprise.This specialty pharmaceutical company is expected to post quarterly earnings of $1.49 per share in its upcoming report, which represents a year-over-year change of -23.2%.Revenues are expected to be $688.17 million, down 13% from the year-ago quarter.The consensus EPS estimate for the quarter has been revised 20.97% lower over the last 30 days to the current level. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.Mallinckrodt doesn't appear a compelling earnings-beat candidate. It operates in two segments, Specialty Brands, and Specialty Generics and Amitiza.Qiagen (NYSE:QGEN) Issues Quarterly Earnings Results, Hits ExpectationsMorgan Stanley Increases Flowserve (NYSE:FLS) Price Target to $25.00 Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell).For Mallinckrodt, the Most Accurate Estimate is lower than the Zacks Consensus Estimate, suggesting that analysts have recently become bearish on the company's earnings prospects. However, the model's predictive power is significant for positive ESP readings only.A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).
Mallinckrodt (NYSE:MNK) issued its earnings results on Tuesday. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period.Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts.Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. Get prepared with the key expectations. Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP.Please note that a negative Earnings ESP reading is not indicative of an earnings miss.
Mallinckrodt PLC analyst estimates by MarketWatch.
This insight is at the core of our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction).The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate.
MNK has been the subject of a number of recent research reports. JPMorgan Chase & Co. cut Mallinckrodt from a “neutral” rating to an “underweight” rating in a report on Tuesday, May 19th.
Barclays restated a “hold” rating on shares of Mallinckrodt in a research note on Wednesday. Finally, Mallinckrodt plc, together with its subsidiaries, develops, manufactures, markets, and distributes specialty pharmaceutical products and therapies in the United States, Europe, the Middle East, Africa, and internationally. SVB Leerink increased their price objective on Mallinckrodt from $2.00 to $3.00 and gave the stock a “market perform” rating in a report on Wednesday, May 6th. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.The earnings report, which is expected to be released on May 5, 2020, might help the stock move higher if these key numbers are better than expectations. Mallinckrodt (MNK) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number.For the last reported quarter, it was expected that Mallinckrodt would post earnings of $2.05 per share when it actually produced earnings of $2.40, delivering a surprise of +17.07%.Over the last four quarters, the company has beaten consensus EPS estimates four times.An earnings beat or miss may not be the sole basis for a stock moving higher or lower.