Drug/Biotech Stocks' Q3 Earnings on Oct 27: MRK, GILD & More
The earnings season for the pharma sector began last week when pharma bellwether Johnson & Johnson reported third-quarter results with an earnings and sales beat, followed by a few large pharma/drug/biotech stocks, which announced their respective quarterly results.
The Zacks classification shows the pharma/biotech industry to fall under the broader Medical sector, comprising pharma/biotech and generic companies, and medical device companies.
As of Oct 19, the Earnings Trends report confirms that 8.9% of the Medical sector participants, constituting 29.8% of the sector’s market capitalization, already reported earnings. While 80% of the companies beat on earnings, 100% surpassed on revenues. Earnings increased 3.8% year over year, while revenues rose 8.9%.
Overall, third-quarter earnings of the Medical sector are expected to decline 7.6%, while sales are projected to increase 3.8%.
Let's see how things have shaped up for Merck & Co., Inc. MRK, Gilead Sciences, Inc. GILD, Alnylam Pharmaceuticals, Inc. ALNY and Vertex Pharmaceuticals Incorporated VRTX in the third quarter. These companies will report earnings on Oct 27:
Merck
Merck’s performance exceeded earnings expectations in each of the trailing four quarters. MRK delivered a trailing four-quarter earnings surprise of 16.79%, on average.
Merck’s Earnings ESP is -2.35% as the Zacks Consensus Estimate is pegged at $1.67 per share and the Most Accurate Estimate stands at $1.64.
MRK has a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Our proven model does not conclusively predict an earnings beat for Merck this time around. The combination of a positive Earnings ESPand a Zacks Rank #1, 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here, as shown below.You can uncover the best stocks to buy or sell before they’re reported with ourEarnings ESP Filter.
Merck’s revenues in the third quarter are likely to have been driven by strong demand for its cancer drug Keytruda, the HPV vaccine and higher sales of Animal health products, as was the trend in several previous quarters.
The Zacks Consensus Estimate for Keytruda’s sales is $5.24 billion.
Merck & Co., Inc. Price and EPS Surprise
Merck & Co., Inc. price-eps-surprise | Merck & Co., Inc. Quote
Gilead
Gilead’s performance exceeded earnings expectations in three of the trailing four quarters and missed the mark on the remaining occasion. GILD delivered a trailing four-quarter earnings surprise of 5.90%, on average.
Our proven model does not conclusively predict an earnings beat for Gilead this time around. GILD’s Earnings ESP is +0.08% as both the Zacks Consensus Estimate and the Most Accurate Estimate is pegged at $1.44 per share. GILD has a Zacks Rank of 3.
Our previous article showed that Gilead did not have the favorable combination to beat on earnings this reporting cycle. However, estimates changed thereafter and an earnings surprise looks possible now.
Key catalysts for Gilead’s revenues in the third quarter are likely to have been sales from its HIV franchise and Cell Therapy product sales.
In the HIV franchise, the Zacks Consensus Estimate for sales of Biktarvy and Descovy is pegged at $2.6 billion and $453 million, respectively.
Sales of Veklury (remdesivir), an antiviral treatment for COVID-19, are likely to have seen a significant sequential decline in the third quarter as the need for medications will decrease with a rise in general immunity to COVID-19.
Gilead Sciences, Inc. Price and EPS Surprise
Gilead Sciences, Inc. price-eps-surprise | Gilead Sciences, Inc. Quote
Alnylam
Alnylam’s earnings missed estimates in each of the trailing four quarters, witnessing a negative surprise of 26.46%, on average. In the last reported quarter, ALNY delivered a negative earnings surprise of 41.36%.
Our proven model does not conclusively predict an earnings beat for Alnylam this reporting cycle. ALNY has an Earnings ESP of -13.37% and is Zacks #3 Ranked, currently. The Zacks Consensus Estimate for its to-be-reported quarter’s earnings stands at a loss of $1.84.
Alnylam’s revenues in the third quarter are likely to have been driven by the sales of its lead drug Onpattro, approved for treating polyneuropathy of hereditary transthyretin-mediated (hATTR) amyloidosis.
Sales of Givlaari and Oxlumo also increased year over year in the last reported quarter, a trend that most likely continued in the second quarter as well.
Alnylam Pharmaceuticals, Inc. Price and EPS Surprise
Alnylam Pharmaceuticals, Inc. price-eps-surprise | Alnylam Pharmaceuticals, Inc. Quote
Vertex
Vertex’s earnings performance exceeded expectations in three of the trailing four quarters and missed the mark on the remaining occasion. VRTX delivered a trailing four-quarter earnings surprise of 4.52%, on average.
Our proven model does not conclusively predict an earnings beat for Vertex this time around. VRTX’s Earnings ESP is -1.38% as the Zacks Consensus Estimate is pegged at $3.69 per share and the Most Accurate Estimate stands at $3.64. VRTX has a Zacks Rank of 3.
Vertex’s revenue growth in third-quarter 2022 is likely to have been driven by a strong uptake of its newest cystic fibrosis (CF) medicine Trikafta/Kaftrio (Trikafta’s brand name in Europe). The Zacks Consensus Estimate for Trikafta sales is pegged at $1.93 billion.
However, higher sales of Trikafta are likely to have caused sales erosion of Vertex’s other CF drugs and existing combinations, namely Kalydeco and Symdeko/Symkevi.
Vertex Pharmaceuticals Incorporated Price and EPS Surprise
Vertex Pharmaceuticals Incorporated price-eps-surprise | Vertex Pharmaceuticals Incorporated Quote
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