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4 Big Drug, Biotech Stocks Set to Beat Q3 Earnings Estimates

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Several big pharma companies have reported their third-quarter results so far. The results demonstrated that sales of key drugs continued to witness strong recovery during the quarter from the adverse impacts of COVID-related disruptions. Companies marketing COVID-19 therapies benefited the most during the third quarter due to continued demand amid the rise in infections since June-end in several countries, especially the United States. The non-COVID vaccine portfolio of large pharma companies also demonstrated a strong recovery in demand due to the return to a more normal level of wellness visits.

However, some companies noted a residual impact of COVID-related disruption for a few drugs, especially the physician-administered ones. This residual impact will likely continue in the fourth quarter of 2021.

Unlike last year, despite the rapidly growing case count, the economy continued to open up in the third quarter.

Among the big pharma companies that have reported so far, Bristol-Myers, Biogen, Gilead Sciences, Merck and Glaxo beat on both earnings and sales. J&J and BioMarin beat earnings estimates but missed the same for revenues. Lilly missed earnings estimates while outpacing estimates for revenues.

Per the Zacks classification, the pharma/biotech industry comes under the broader Medical sector, which comprises pharma/biotech as well as medical device companies.

Per the Earnings Trends report, as of Oct 27, 25.5% of the companies in the Medical sector, constituting nearly 47.6% of the sector’s market capitalization, have reported earnings. While 78.6% beat earnings estimates, 85.7% beat the same for sales. Earnings increased 19.6% year over year on 12.1% higher revenues. Overall, third-quarter earnings for the Medical sector are expected to rise 21.8% on a 10.5% sales increase.

Zeroing in on the Winners

Here we have highlighted four drug/biotech companies, which are expected to deliver an earnings surprise in their upcoming quarterly results.

Earnings ESP is our proprietary methodology for determining the stocks that have the best chance to deliver an earnings surprise. Earnings ESP shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.

According to the Zacks 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. The selection can be done with the help of the Zacks Stock Screener.

Our research shows that for stocks with this combination, the chance of an earnings surprise is as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

4 Biotech Stocks That Match the Criteria

Pfizer Inc.’s (PFE - Free Report) COVID-19 vaccine, Comirnaty, is likely to have been a key contributor to the company’s top line during the third quarter. Moreover, Pfizer’s key brands and new drugs are also likely to have aided sales. However, sales of several legacy drugs are likely to have been hurt by continued generic competition. (Read more: Will Pfizer Keep the Earnings Streak Alive in Q3?)

The combination of Pfizer’s Earnings ESP of +2.25% and a Zacks Rank #3 raises the possibility of an earnings surprise in the to-be-reported quarter.

The company is scheduled to release earnings for the third quarter of 2021 on Nov 2.

Pfizer Inc. Price and EPS Surprise

Pfizer Inc. Price and EPS Surprise

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

Vertex Pharmaceuticals’ (VRTX - Free Report) revenues are likely to have been driven by the rapid uptake of the company’s newest cystic fibrosis medicine, Trikafta/Kaftrio. (Read more: Vertex to Report Q3 Earnings: What's in the Cards?)

The company has an Earnings ESP of +10.62% and a Zacks Rank #2.

The company is scheduled to release earnings for the third quarter of 2021 on Nov 2.

Regeneron Pharmaceuticals, Inc.’s (REGN - Free Report) top line is likely to have been driven by strong demand for Eylea and Dupixent during the third quarter. The antibody cocktail REGEN-COV for COVID-19 patients is likely to have brought additional revenues.

The company has an Earnings ESP of +8.78% and a Zacks Rank #1.

The company is scheduled to release earnings for the third quarter of 2021 on Nov 4.

Zoetis Inc.’s (ZTS - Free Report) revenues are likely to have been driven by the continued momentum of solid growth of key dermatology products during the third quarter. However, generic competition for some products is likely to hurt the top line.

The company has an Earnings ESP of +5.46% and a Zacks Rank of #3.

The company is scheduled to release earnings for the third quarter of 2021 on Nov 4.

Zoetis Inc. Price and EPS Surprise

Zoetis Inc. Price and EPS Surprise

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

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