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3 ETFs to Watch on Biotech Earnings

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The earnings season is off to a flying start, owing to a slew of upbeat economic data, strong corporate performance and President Donald Trump's tax reform signed into law. However, equity markets have been suffering a sell-off owing to fears of rising rates. Coming to the performance of biotech giants, it has been a mixed bag for biotech companies, with some beating market expectations, while a few failing to do so (read: Must-Follow ETF Moves as Finally Selloffs Set In).

We will now discuss the performance of a few biotech giants such as Amgen Inc AMGN, Gilead Sciences GILD, Biogen Inc BIIB and Alexion Pharmaceuticals ALXN.

Earnings in Focus

Amgen reported fourth-quarter 2017 adjusted earnings of $2.89 per share, missing the Zacks Consensus Estimate of $3.04, but unchanged from the year-ago quarter. The company also missed the Zacks Consensus Estimate on revenues. Amgen reported revenues of $5.802 billion, missing the Zacks Consensus Estimate of $5.856 billion and decreasing 2.7% from $5.965 billion in the year-ago quarter.

For full-year 2017, the company reported a 1% decrease in revenues to $22.849 billion. However, Non-GAAP EPS increased 8% to $12.58.

The company expects its 2018 non-GAAP EPS to be in the range $12.6-$13.7. It also expects its revenues to be in the range of $21.8-$22.8 billion. Moreover, Amgen expects adjusted tax rate to be around 14-15% in 2018, owing to the tax reform.

Gilead Sciences reported fourth-quarter 2017 adjusted earnings of $1.78 per share, surpassing the Zacks Consensus Estimate of $1.70 but decreasing around 34.1% from $2.70 per share in the year-ago quarter. Moreover, the company also beat the Zacks Consensus Estimate on revenues. The company reported revenues of $5.949 billion, surpassing the Zacks Consensus Estimate of $5.776 billion but decreasing more than 18.7% from $7.320 billion in the year-ago quarter.

For full-year 2017, the company reported a 14.1% decrease in revenues to $26.107 billion. Moreover, Non-GAAP EPS decreased 23.6% to $8.84 in the period.

The company expects its full-year 2018 revenues to be in the range of $20-$21 billion. Adjusted R&D expenses and adjusted SG&A expenses are projected in the range of $3.4-$3.6 billion and $3.4-$3.6 billion, respectively.

Biogen Inc reported fourth-quarter adjusted earnings per share of $5.26, missing the Zacks Consensus Estimate of $5.44 but increasing 4.4% from $5.04 per share in the year-ago quarter. The company reported revenues of $3.307 billion, surpassing the Zacks Consensus Estimate of $3.074 billion and increasing roughly 15.1% from $2.872 billion in the year-ago quarter.

For full-year 2017, the company reported a 7.0% increase in revenues to $12.274 billion. Moreover, Non-GAAP EPS increased 8.0% to $21.81.

Biogen expects 2018 earnings to be in the range of $24.20 and $25.20 per share. The company expects its full-year 2018 revenues to be in the range of $12.7-$13.0 billion in 2018.

Alexion Pharmaceuticals Inc reported fourth-quarter adjusted earnings per share of $1.48, surpassing the Zacks Consensus Estimate of $1.28 and increasing roughly 17.5% from $1.26 per share in the year-ago quarter. The company reported revenues of $909.7 million, which beat the consensus estimate of $878 million and increased roughly 9.5% from $830.8 million in the year-ago quarter.

For full-year 2017, the company reported a 15.1% increase in revenues to $3.551 billion. Moreover, Non-GAAP EPS increased 26.8% to $5.86.

The company expects its full-year 2018 revenues to be in the range of $3.850-$3.950 billion. The company expects its 2018 non-GAAP EPS to be in the range $6.6-$6.8.

We will now discuss a few ETFs with high exposure to the companies discussed.

iShares Nasdaq Biotechnology ETF IBB

This fund seeks to provide exposure to the biotech industry. It has AUM of $9.3 billion and charges a fee of 47 basis points a year. The fund has 7.8% exposure to Amgen, 7.8% to Biogen, 8.5% to Gilead and 3.5% to Alexion (as of Feb 7, 2018). The fund has returned 12.0% in a year. It has a Zacks ETF Rank #3 (Hold), with a High risk outlook.

VanEck Vectors Biotech ETF BBH

This fund has AUM of $539.7 million and charges a fee of 35 basis points a year. The fund has 12.2% exposure to Amgen, 11.9% to Gilead, 6.9% to Biogen and 4.6% to Alexion (as of Feb 8, 2018). The fund has returned 2.7% in a year. It has a Zacks ETF Rank #3, with a High risk outlook.

ProShares Ultra Nasdaq Biotechnology ETF BIB

This fund has AUM of $408.8 million and charges a fee of 95 basis points a year. The fund has 7.8% exposure to Amgen, 7.8% to Biogen, 7.5% to Gilead and 3.7% to Alexion (as of Dec 31, 2017). The fund has returned 19.3% in a year.

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ISHARES NDQ BIO (IBB): ETF Research Reports
 
PRO-ULT NDQ BIO (BIB): ETF Research Reports
 
VANECK-BIOTECH (BBH): ETF Research Reports
 
Alexion Pharmaceuticals, Inc. (ALXN) : Free Stock Analysis Report
 
Gilead Sciences, Inc. (GILD) : Free Stock Analysis Report
 
Amgen Inc. (AMGN) : Free Stock Analysis Report
 
Biogen Inc. (BIIB) : Free Stock Analysis Report
 
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