Sage Posts Surprise Quarterly Profit As Sales Surge; Shares Pop 6%

Sage Therapeutics jumped almost 6% to close at $85.04 on Feb. 24 after the biopharmaceutical company swung to a surprise profit in the fourth quarter. Total revenue jumped significantly to $1.1 billion year-over-year. Sales during the reported quarter were driven by collaboration revenue from Biogen.

Sage (SAGE) reported 4Q adjusted earnings of $18.19 per share, compared to a loss of $3.25 per share during the same quarter last year. Analysts had expected the company to report a loss of $0.35 per share.

Research and development expenses came in at $81.7 million in 4Q, down 10.5% year-over-year. Selling, general and administrative expenses decreased 37.1% to $53.5 million. (See Sage stock analysis on TipRanks)

Sage CEO Barry Greene commented, “Our collaboration with Biogen enhances our strategic, financial, and operational flexibility, enabling our plans to expand and accelerate our pipeline and extending the potential impact of our product candidates, if we’re successful, to more than 450 million patients worldwide.”

“I believe 2021, with 10 expected data readouts, will be a transformational year for Sage in our mission to become the leading brain health company in the next five years,” Greene added.

For 2021, the company expects cash, cash equivalents, restricted cash, and marketable securities of more than $1.7 billion.

Following the 4Q results, Stifel Nicolaus analyst Paul Matteis decreased the stock’s price target to $121 (42.3% upside potential) from $123 and maintained a Buy rating. The analyst believes the “big event here is WATERFALL data,” and “remains optimistic.”

Matteis noted Sage “is set to announce data nearer term for essential tremor where he is optimistic there will be an efficacy signal, though more dosing work could be needed to further refine the product profile and mitigate sedation, which ultimately will be key for the commercial potential of ‘324.”

He argues that “other assets including SAGE-718, and an expanding pipeline, are looking more interesting and appear to be both underapprecaited and undervalued in shares.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 11 Buys versus 6 Holds. The average analyst price target of $93.64 implies 10% upside potential to current levels. Shares have increased almost 66% over the past six months.

Sage scores an 8 of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

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