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3 ETFs to Watch on Biotech Earnings

Zacks Equity Research
Amphenol (APH) revenues were driven by strong organic growth across most of the end markets, in particular, mobile devices, military, industrial, automotive, and commercial air.

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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