U.S. markets open in 7 hours 34 minutes
  • S&P Futures

    3,604.50
    -32.00 (-0.88%)
     
  • Dow Futures

    29,514.00
    -360.00 (-1.21%)
     
  • Nasdaq Futures

    12,206.25
    -51.25 (-0.42%)
     
  • Russell 2000 Futures

    1,829.70
    -23.30 (-1.26%)
     
  • Crude Oil

    44.54
    -0.99 (-2.17%)
     
  • Gold

    1,777.20
    -10.90 (-0.61%)
     
  • Silver

    22.25
    -0.38 (-1.70%)
     
  • EUR/USD

    1.1970
    0.0000 (-0.00%)
     
  • 10-Yr Bond

    0.8420
    0.0000 (0.00%)
     
  • Vix

    20.84
    -0.41 (-1.93%)
     
  • GBP/USD

    1.3348
    +0.0034 (+0.26%)
     
  • USD/JPY

    103.9040
    -0.1810 (-0.17%)
     
  • BTC-USD

    18,462.97
    -69.91 (-0.38%)
     
  • CMC Crypto 200

    363.90
    -6.61 (-1.79%)
     
  • FTSE 100

    6,367.58
    +4.65 (+0.07%)
     
  • Nikkei 225

    26,433.62
    -211.09 (-0.79%)
     

Healthcare to Post Solid Q3 Earnings Growth: ETFs in Focus

Sweta Killa
·5 min read

Although the healthcare sector has lately been hit by the news that Johnson and Johnson JNJ and Eli Lilly LLY have halted their trials for the novel disease vaccine over safety concerns, it is expected to witness the second-highest earnings growth this earnings season.

The ultra-popular ETFs, Health Care Select Sector SPDR Fund XLV, Vanguard Health Care ETF VHT, iShares U.S. Healthcare ETF IYH and Fidelity MSCI Health Care Index ETF FHLC, have gained around 1% in the past three months (read: JNJ Beats Q3 Earnings, Lifts Outlook: Healthcare ETFs in Focus).

The price movement of the fund depends on earnings releases of some big names like Pfizer PFE, Merck MRK, Amgen AMGN, AbbVie ABBV, Gilead Sciences GILD and Bristol-Myers Squibb BMY that dominate returns. These firms are lined up to report their earnings in the coming weeks. All these stocks collectively account for 22.6% share in XLV, 20.4% in IYH, 19.6% in VHT and 19.4% in FHLC.

Let’s dig deeper into the earnings picture of these companies, which will drive the performance of the above-mentioned funds in the coming days:

According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Inside Our Surprise Prediction for These Stocks

Pfizer has a Zacks Rank #3 and an Earnings ESP of -0.12%. The stock witnessed negative earnings estimate revision of a couple of cents for the to-be-reported quarter over the past 30 days. It delivered earnings surprise of 12.53%, on average, in the past four quarters and has a Value Score of B. Pfizer is scheduled to report earnings on Oct 27, before the opening bell.

Merck is expected to report results on Oct 27 before market open. It has a Zacks Rank #3 and an Earnings ESP of +2.60%. The stock witnessed negative earnings estimate revision of a penny over the past 30 days for the to-be-reported quarter. Additionally, the stock delivered an average beat of 12.66% in the last four quarters. Merck has a VGM Score of A (see: all the Healthcare ETFs here).

Amgen carries a Zacks Rank #3 and has an Earnings ESP of +0.01%. It has witnessed positive earnings estimate revision of a penny over the past 30 days for the quarter to be reported. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. The earnings surprise track over the past four quarters is strong, with the beat being 8.58%, on average. The stock has a VGM Score of A. Amgen will report earnings on Oct 28.

AbbVie has a Zacks Rank #3 and an Earnings ESP of -0.97%. The company delivered earnings surprise of 3.32%, on average, in the last four quarters. It saw negative earnings estimate revision of a penny over the past month for the to-be-reported quarter. The stock has a top Value Score of A. The company is scheduled to report on Oct 30 before the opening bell.    

Gilead is expected to release earnings on Oct 28 after market close. It has a Zacks Rank #3 and an Earnings ESP of 0.00%. The stock saw negative earnings estimate revision of 3 cents over the past month for the to-be-reported quarter. Gilead’s negative earnings surprise was 10.21%, on average, over the last four quarters. Gilead has a VGM Score of A.

Bristol-Myers will likely report earnings on Nov 5 before the opening bell. It has a Zacks Rank #3 and an Earnings ESP of +1.01%. The stock delivered an earnings surprise of 8.02%, on average, over the past four quarters, but saw negative earnings estimate revision of a penny for the to-be-reported quarter in a month. It has a VGM Score of A (read: Healthcare ETFs Pop on Bristol Myers-MyoKardia Deal).

Summing Up

The healthcare sector is expected to witness substantial earnings growth of 5.1% in the third quarter, representing the second strongest sector this earnings season. In particular, FHLC has a Zacks ETF Rank #3 while the remaining three have a Zacks ETF Rank #2.

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Johnson Johnson (JNJ) : Free Stock Analysis Report
 
Pfizer Inc. (PFE) : Free Stock Analysis Report
 
Gilead Sciences, Inc. (GILD) : Free Stock Analysis Report
 
Merck Co., Inc. (MRK) : Free Stock Analysis Report
 
Eli Lilly and Company (LLY) : Free Stock Analysis Report
 
Bristol Myers Squibb Company (BMY) : Free Stock Analysis Report
 
Amgen Inc. (AMGN) : Free Stock Analysis Report
 
AbbVie Inc. (ABBV) : Free Stock Analysis Report
 
Health Care Select Sector SPDR ETF (XLV): ETF Research Reports
 
Vanguard Health Care ETF (VHT): ETF Research Reports
 
iShares U.S. Healthcare ETF (IYH): ETF Research Reports
 
Fidelity MSCI Health Care Index ETF (FHLC): ETF Research Reports
 
To read this article on Zacks.com click here.
 
Zacks Investment Research
 
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report