Cubist Pharmaceuticals, Inc. Earnings Cheat Sheet: Margins Shrink For Fifth Straight Quarter as Profit Falls

Rising costs hurt Cubist Pharmaceuticals, Inc. (NASDAQ:CBST) in the most recent quarter as profit dropped from a year earlier. Cubist Pharmaceuticals is focused on the research, development, and commercialization of pharmaceutical products that address unmet medical needs in the acute care environment.

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Cubist Pharmaceuticals Earnings Cheat Sheet for the Third Quarter

Results: Net income for Cubist Pharmaceuticals, Inc. fell to $24.2 million (33 cents per share) vs. $31.2 million (50 cents per share) a year earlier. This is a decline of 22.4% from the year earlier quarter.

Revenue: Rose 24.5% to $201.7 million from the year earlier quarter.

Actual vs. Wall St. Expectations: CBST reported adjusted net income of 85 cents per share. By that measure, the company beat the mean estimate of 32 cents per share. It beat the average revenue estimate of $182.9 million.

Quoting Management: “Our outstanding financial performance in Q3 is another important milestone in the transformational year we are having at Cubist,” said Michael Bonney, President and CEO of Cubist. “With the strong growth of CUBICIN, net U.S. product revenue grew 21% while the significant leverage in our business model drove 33% growth in operating income. In addition, we are very pleased with the early progress with DIFICID, and we have been disciplined in our efforts to drive shareholder value by advancing our late-stage clinical pipeline.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 1.2 percentage points to 76% from the year earlier quarter. Over that time, margins have contracted on average 1.1 percentage points per quarter on a year-over-year basis.

The company has now topped analyst estimates for the last four quarters. It beat the mark by 10 cents in the second quarter, by 7 cents in the first quarter, and by 9 cents in the fourth quarter of the last fiscal year.

Revenue has now gone up for three straight quarters. In the second quarter, revenue rose 4.9% to $176.8 million while the figure rose 12.8% in the first quarter from the year earlier.

Looking Forward: The average estimate for the fourth quarter remains unchanged at 31 cents a share. Over the past sixty days, the average estimate for the fiscal year has reached 72 cents abs per share, a decline from 73 cents.

Competitors to Watch: Optimer Pharmaceuticals, Inc. (NASDAQ:OPTR), Merck & Co., Inc. (NYSE:MRK), Teva Pharmaceutical Industries Ltd (NASDAQ:TEVA), Theravance, Inc. (NASDAQ:THRX), Pfizer Inc. (NYSE:PFE), Novartis AG (NYSE:NVS), The Medicines Company (NASDAQ:MDCO) and Abbott Laboratories (NYSE:ABT).

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(Source: Xignite Financials)