We are approaching the tail end of the third-quarter reporting cycle. The Q3 results have been strong overall. Accelerating revenue growth has been particularly impressive. The number of companies coming up with positive surprises has been significantly higher, with revenue surprises trending above historical averages. Also, the estimate revision trend for Q4 has been mostly favorable.
As of Nov 1, 2017, 327 S&P 500 members, accounting for 71.2% of the index’s total market capitalization, have reported results, according to the Earnings Outlook.
Total earnings of these 327 index members were up 7.8% from the year-ago quarter on a 6.5% improvement in revenues. The beat ratio was 74.9% for earnings and 65.7% for revenues.
Per the report, total earnings of S&P 500 companies in Q3 are expected to grow 5.6% year over year on 5.5% higher revenues. Meanwhile,Q4 earnings growth is currently expected to be 7.3%.
Please note that the broader Medical sector (includes drug, biotech as well as Medical Device companies) is expected to record year-over-year growth of 4.8% in revenues and 6.4% in earnings in Q3.
Among the big biotech/pharma companies that reported this week, Pfizer PFE and Allergan AGN beat earnings expectations while revenues came in line. Zoetis ZTS beat expectations for both earnings and sales. While Pfizer and Zoetis raised their earnings guidance, Allergan increased only the upper end of its earnings outlook.
Here we have three biotech/pharma companies that are set to report third-quarter results on Nov 6. Let's see how things are shaping up for this quarter.
Mylan N.V. MYL
Mylan, which is scheduled to release earnings before the market opens, delivered a negative earnings surprise of 6.78% last quarter. Mylan’s earnings have been mixed so far, The company topped earnings estimates in two of the trailing four quarters and missed the same in the other two. The company delivered an average negative earnings surprise of 0.59% in the trailing four quarters.
For this quarter, Mylan has an Earnings ESP of +3.92% and a Zacks Rank #2 (Buy), indicating a likely positive surprise. The Zacks Consensus Estimate is pegged at $1.21 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Newly launched products and acquisitions of Meda and the Renaissance Topicals Business are likely to aid the top line. However, sales of EpiPen Auto-Injector are anticipated to decline in the current quarter as a result of increased competition and the impact of the authorized generic launch. (Read More: Is a Beat in the Cards for Mylan This Earnings Season?)
Horizon Pharma Public Limited Company HZNP
Horizon Pharma is also scheduled to announce results before the opening bell. Its earnings performance has been pretty impressive so far, having delivered a positive surprise in three of the last four quarters. The average earnings beat over the last four quarters is 65.93%. Last quarter, the company delivered a positive earnings surprise of 241.67%.
The company has an Earnings ESP of -8.48% and a Zacks Rank #4 (Sell). The Zacks Consensus Estimate is pegged at 22 cents per share.
The company expects continued double-digit net sales growth for Ravicti. Meanwhile, Horizon Pharma’s primary care business is under pressure due to the implementation of a new commercial model. (Read More: Horizon Pharma Q3 Earnings: Disappointment in Store?)
Keryx Biopharmaceuticals, Inc. KERX
Keryx is expected to report after market close. Last quarter, the company delivered a negative earnings surprise of 23.53%. Keryx’s performance over the last four quarters has been disappointing. The company reported a wider-than-expected loss in all the trailing four quarters, with an average negative surprise of 34.00%.
The company has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate is pegged at a loss of 17 cents per share.
Apart from license fees, Keryx’s top line comprises revenues generated by its only marketed product, Auryxia, which is approved for treating patients suffering from chronic kidney disease (CKD) on dialysis. The company believes that the recent formulary additions at two major Part D providers will boost Aurexia’s sales in Q3. (Read More: What to Expect from Keryx This Earnings Season?)
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
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
Pfizer, Inc. (PFE) : Free Stock Analysis Report
Allergan PLC. (AGN) : Free Stock Analysis Report
Horizon Pharma PLC (HZNP) : Free Stock Analysis Report
Keryx Biopharmaceuticals, Inc. (KERX) : Free Stock Analysis Report
Zoetis Inc. (ZTS) : Free Stock Analysis Report
Mylan N.V. (MYL) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research