The first-quarter earnings season is in full flow, with almost 700 companies scheduled to report results this week, including 154 S&P 500 members. The focus in this earnings cycle is more on the expectations for the upcoming quarters due to the ongoing coronavirus pandemic and less on the performance in the January-March period.
The Medical sector, comprising pharma/biotech and medical device companies, seems to have performed reasonably well amid this mayhem. As of Apr 22, 15.4% of the companies in this sector, representing 33.3% of the sector’s market capitalization, had reported earnings. Of these, 87.5% beat on earnings and 75% beat on revenues, resulting in a blended beat of 75%. Earnings are up 3% year over year on 5.3% higher revenues. Overall, earnings and sales for the Medical sector are projected to grow 3.1% and 8.1%, respectively, for the quarter to be reported.
Quite a few pharma giants have reported results. Among these, Johnson & Johnson, Novartis NVS, Merck MRK and Lilly beat on both earnings and sales. The effects of the ongoing pandemic will be more prominent in the second quarter as the first quarter benefited from forward purchasing by hospitals and consumers amid the global lockdown. While J&J lowered its financial guidance for 2020 due to uncertainties related to the pandemic, Novartis preferred to reiterate the same for the time being.
Among the biotech stocks, Biogen BIIB reported earnings and revenue beat for this earnings season.
Let us see what is in store for companies that are set to report first-quarter 2020 results on Apr 30.
Amgen’s performance has been pretty impressive, with earnings beating estimates in the trailing four quarters. The company has a four-quarter positive earnings surprise of 6.04%, on average.
Amgen’s growth products — Prolia, Evenity, Repatha, Aimovig, Parsabiv and Otezla — are expected to have driven sales. Sales of Prolia, Xgeva, Blincyto, Parsabiv, Kyprolis and Nplate are likely to have been driven by higher demand trends once again. However, increasing branded and generic competition for its legacy products like Enbrel, Aranesp, Epogen, Neupogen, Neulasta and Sensipar is likely to have acted as a deterrent.
Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
While Amgen currently carries a Zacks Rank #3, it has an Earnings ESP of -0.47%. The Zacks Consensus Estimate for earnings currently stands at $3.70 per share. You can see the complete list of today’s Zacks #1 Rank stocks here.
Gilead has a disappointing track record, with earnings beating estimates in two of the last four quarters and missing in the other two, the average negative surprise being 2.49%. In the last reported quarter, the company missed expectations by 22.62%.
Gilead has shifted focus to the HIV franchise and newer avenues like CAR-T therapy due to a massive decline in HCV franchise sales. The HIV franchise maintained momentum in the previous quarter and it is expected to have continued in the to-be-reported quarter on the strong uptake of Biktarvy. Descovy-based regimens continue to perform well. Encouraging uptake of the drug for the pre-exposure prophylaxis (PrEP) setting is likely to have benefited the top line, further. However, during the last earnings call, Gilead stated that total product sales will decline sequentially in the first quarter, primarily due to U.S. seasonal inventory patterns and buying patterns of public payers, which negatively impact payer mix.
Per our proven model, Gilead is likely to report an earnings beat as it currently has a Zacks Rank #3 and an Earnings ESP of +6.67%. The Zacks Consensus Estimate for earnings currently stands at $1.58 per share.
Amarin’s performance has been pretty impressive, with earnings beating estimates in the trailing four quarters. The company has a four-quarter positive earnings surprise of 204.17%, on average.
Amarin’s sole marketed drug, Vascepa, has shown solid performance and should maintain momentum. The drug’s recent label expansion into cardiovascular indication looks promising as well.
Amarin currently carries a Zacks Rank #2 and has an Earnings ESP of +25.00%, which increases the odds of an earnings beat.
Seattle Genetics SGEN
Seattle Genetics has a decent track record, with earnings beating estimates in three of the trailing four quarters and missing in one. The company has a four-quarter positive earnings surprise of 11.66%, on average.
Seattle Genetics' lead drug, Adcetris, has been performing well since launch. The drug's label expansion into frontline stage III/IV HL and frontline CD30-expressing PTCL is generating incremental revenues and likely to have boosted performance in the to-be-reported quarter.
Seattle Genetics currently carries a Zacks Rank #2 and an Earnings ESP of +1.19%.
Medical - Biomedical and Genetics Industry 5YR % Return
Medical - Biomedical and Genetics Industry 5YR % Return
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Biogen Inc. (BIIB) : Free Stock Analysis Report
Gilead Sciences, Inc. (GILD) : Free Stock Analysis Report
Merck & Co., Inc. (MRK) : Free Stock Analysis Report
Novartis AG (NVS) : Free Stock Analysis Report
Amgen Inc. (AMGN) : Free Stock Analysis Report
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Amarin Corporation PLC (AMRN) : Free Stock Analysis Report
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