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Drug/Biotech Stock Q3 Earnings Due on Oct 29: MRK, PFE & More

Zacks Equity Research

The third-quarter reporting cycle for the Medical sector is in full swing. The sector comprises pharma/biotech and medical device companies.

The Earnings Trends shows that the sector participants, which reported until Oct 23 and constitute nearly 38.9% of the sector’s market capitalization, delivered 9.1% earnings growth and a 8% rise in sales year over year. The beat ratio for earnings was 91.7% and for revenues, 83.3%. Overall, third-quarter earnings and sales growth of this sector is expected to be 1.2% and 5.8%, respectively.

Several big drug/biotech companies like Eli Lilly LLY, AstraZeneca AZN, Alexion ALXN, Biogen BIIB and Gilead Sciences GILD reported third-quarter results last week.

AstraZeneca, Alexion and Biogen beat on both counts in the third quarter. Alexion raised its revenue and earnings guidance for 2019. Lilly surpassed on third-quarter earnings but missed on sales. Gilead Sciences’ earnings missed the mark while sales managed to marginally top the same. The company narrowed its guidance for 2019.

Let’s analyze the four pharma/biotech companies that are set to report third-quarter 2019 results on Oct 29.

What the Model Suggests

The proven Zacks model predicts an earnings beat for the stock with a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). This combination increases the chances of a likely positive surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Merck & Co., Inc. MRK

Merck, which is scheduled to release earnings before the market opens, delivered a positive earnings surprise of 12.07% in the last reported quarter. The company beat on earnings in each of the last four quarters, the average being 7.96%.

For the quarter to be reported, Merck has an Earnings ESP of +0.16% and a Zacks Rank #3. The Zacks Consensus Estimate stands at $1.25 per share.

Merck’s new products like cancer drug Keytruda, Gardasil vaccine and Bridion injection are likely to have driven the top line in the to-be-reported quarter on the back of strong demand trends. However, the top line is expected to reflect the impact of loss of exclusivity (LOE) for some products as well as currency headwinds. (Read more: Can Merck Keep the Earnings Beat Streak Alive in Q3?)

Merck & Co., Inc. Price and EPS Surprise

Merck & Co., Inc. Price and EPS Surprise

Merck & Co., Inc. price-eps-surprise | Merck & Co., Inc. Quote

Pfizer Inc. PFE

Pfizer, which is scheduled to release earnings before the opening bell, delivered a positive earnings surprise of 3.90% in the last reported quarter. The company beat on earnings in each of the preceding four quarters, the average being 4.63%.

For the to-be-reported quarter, Pfizer has an Earnings ESP of -0.67% and a Zacks Rank of 3. The Zacks Consensus Estimate is pegged at a loss of 63 cents per share.

Higher sales of Pfizer’s key brands Eliquis and Ibrance in the Biopharma segment, biosimilars and strong sales in the emerging markets are likely to have compensated lower sales in the Upjohn group. (Read more: Pfizer to Report Q3 Earnings: What's in the Cards?)

Pfizer Inc. Price and EPS Surprise

Pfizer Inc. Price and EPS Surprise

Pfizer Inc. price-eps-surprise | Pfizer Inc. Quote

Amgen Inc. AMGN

Amgen is scheduled to release earnings, after the market closes. The company delivered a positive earnings surprise of 10.89% in the last reported quarter. Amgen’s performance has been impressive with the company delivering a positive surprise in each of the trailing four quarters, the average being 6.72%.

For the quarter to be reported, Amgen has an Earnings ESP of +0.04% and a Zacks Rank of 3. The Zacks Consensus Estimate stands at $3.51 per share.

Higher sales of products like Prolia, Xgeva, Kyprolis and Blincyto are expected to have made up for weak sales of Amgen’s mature drugs, namely Enbrel, Aranesp, Epogen, Neupogen, Neulasta and Sensipar that face an array of branded and generic competitors. (Read more: Amgen to Report Q3 Earnings: What's in the Cards?)

Amgen Inc. Price and EPS Surprise

Amgen Inc. Price and EPS Surprise

Amgen Inc. price-eps-surprise | Amgen Inc. Quote

Incyte Corporation INCY

Incyte is scheduled to report third-quarter 2019 results on Oct 29, before market open. In the last reported quarter, the company beat on earnings by a whopping 53.06%. Its earnings surpassed expectations twice over the last four quarters, the average positive surprise being 25.01%.

For the to-be-reported quarter, Incyte has an Earnings ESP of +1.15% and a Zacks Rank of 1 which suggest an earnings beat. The Zacks Consensus Estimate is pegged at 65 cents per share. You can see the complete list of today’s Zacks #1 Rank stocks here.

Incyte’s lead drug Jakafi drove second-quarter results, a trend that most likely continued in the third quarter. Notably, Jakafi sales and royalties are key catalysts for the company’s revenue growth, while Iclusig sales and Olumiant royalties also contribute to the top line. These are therefore expected to have contributed significantly to the company’s revenues in the third quarter. (Read more: Will Strong Jakafi Sales Drive Incyte's Q3 Earnings?)

Incyte Corporation Price and EPS Surprise

Incyte Corporation Price and EPS Surprise

Incyte Corporation price-eps-surprise | Incyte Corporation Quote

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Pfizer Inc. (PFE) : Free Stock Analysis Report
 
Eli Lilly and Company (LLY) : Free Stock Analysis Report
 
AstraZeneca PLC (AZN) : Free Stock Analysis Report
 
Merck & Co., Inc. (MRK) : Free Stock Analysis Report
 
Amgen Inc. (AMGN) : Free Stock Analysis Report
 
Gilead Sciences, Inc. (GILD) : Free Stock Analysis Report
 
Biogen Inc. (BIIB) : Free Stock Analysis Report
 
Alexion Pharmaceuticals, Inc. (ALXN) : Free Stock Analysis Report
 
Incyte Corporation (INCY) : Free Stock Analysis Report
 
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