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

Rising costs hurt Cubist Pharmaceuticals Inc. (NASDAQ:CBST) in the fourth 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 Fourth Quarter.

Results: Net income for the pharmaceutical company fell to $6.8 million (11 cents per share) vs. $14.6 million (24 cents per share) a year earlier. This is a decline of 53.1% from the year earlier quarter.

Revenue: Rose 31.6% to $212.9 million from the year earlier quarter.

Actual vs. Wall St. Expectations: CBST reported adjusted net income of 66 cents per share. By that measure, the company beat the mean estimate of 29 cents per share. It beat the average revenue estimate of $204.7 million.

Quoting Management: “With revenue growth of 32% in the fourth quarter and 18% for 2011, we enter 2012 with very strong momentum,” said Michael Bonney, President and CEO of Cubist. “On all fronts, from our strong commercial model to R&D to business development, we have bolstered our position as one of the world’s leading acute care companies.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell one percentage point to 77% from the year earlier quarter. Over that time, margins have contracted on average one percentage point 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 one cent in the third quarter, by 10 cents in the second quarter, and by 7 cents in the first quarter.

Revenue has risen the past four quarters. Revenue increased 24.5% to $201.7 million in the third quarter. The figure rose 4.9% in the second quarter from the year earlier and climbed 12.8% in the first quarter from the year-ago quarter.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the first quarter of the next fiscal year has moved down from 49 cents a share to 35 cents over the last ninety days. For the fiscal year, the average estimate has moved down from 77 cents a share to 74 cents over the last thirty days.

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

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com