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Drug Stocks to Watch for Earnings on Aug 3: ZTS, EXEL & More
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In the thick of Q2 earnings season, we see a clear trend of continuing earnings decline for the benchmark S&P 500 index – the fifth quarter in a row. As for beat ratios, they aren’t all that bad. Of the 317 S&P 500 companies that have reported so far (Jul 29), 72.9% surpassed earnings expectations while 53.6% topped revenue estimates.
Meanwhile, the focus is on the Medical sector, which is among the very few winners this season, with several pharma and biotech companies having already reported results. Our Q2 scorecard shows that 63.5% of the Medical sector has reported results with a blended beat of 75.8% (the percentage of companies that have beaten both EPS as well as revenue estimates) with the sector recording 5.4% earnings growth on revenue growth of 10.5%.
Per our Earnings Trends report, Medical is one of the six sectors expected to record earnings growth in Q2.
A look at the second-quarter performance of the Medical sector shows that companies like Johnson & Johnson (JNJ - Free Report) , Novartis AG, Abbott Laboratories, Biogen Inc., Amgen, AbbVie, Alexion, Bristol-Myers, and Celgene have topped expectations, while biotech major Gilead Sciences Inc. (GILD - Free Report) has reported disappointing results. While Gilead beat earnings by just a penny, revenues fell short of expectations. Gilead even lowered its product sales guidance for the year.
Still, several pharma and biotech companies are yet to report Q2 results. Let’s see what’s in store for these five drug stocks when they report their results on Aug 3.
What Awaits These Drug Stocks?
One of the leading global animal health companies, Zoetis Inc. (ZTS - Free Report) has an impressive track record with the company consistently beating earnings expectations. Will Zoetis be able to keep its earnings streak alive? This Zacks Rank #1 (Strong Buy) stock, which has an Earnings ESP of +2.27%, looks poised to beat expectations in Q2 as well. Focus will be on the performance of companion animal and livestock businesses along with an update on the guidance front (read more: Zoetis: Stock to Beat Earnings Estimates in Q2 Again).
Biotech company, Exelixis, Inc. (EXEL - Free Report) has a disappointing track record with the company missing expectations in three of the last four reported quarters. However, a surprise could be in store for Exelixis this earnings season. Exelixis’ Zacks Rank #3 (Hold) which when combined with an ESP of +3.70% makes us reasonably confident of a beat this quarter. This cancer focused company’s lead marketed product is Cometriq. Among other products are Cotellic and Cabometyx. The company is also working on label expansion of these drugs (read more: Exelixis Q2 Earnings Preview: Stock Likely to Gain?).
Being a development-stage pharma company, Aerie Pharmaceuticals, Inc. does not have any approved product in its portfolio. In this scenario, investor focus will be on pipeline updates on its lead candidates – Rhopressa and Roclatan. Aerie’s performance so far has been mostly disappointing with the company missing expectations in three of the last four quarters. Though the stock’s Zacks Rank #3 increases the predictive power of the ESP, it also has an ESP of 0.00%, making a surprise prediction difficult (read more: What Awaits Aerie Pharmaceuticals in Q2 Earnings?).
Development-stage biotech company, Conatus Pharmaceuticals Inc.’s track record has been mixed with the company surpassing expectations on two occasions, while posting in-line results in the other two. Our proven model shows that Conatus is likely to beat estimates in Q2 as this Zacks Rank #3 stock currently has an ESP of +5.41%. With no approved product in Conatus’ portfolio at the moment, investor focus is expected to remain on the company’s progress with its lead liver disease candidate, emricasan (read more: Conatus May Surprise in Q2 Earnings: Stock to Gain?).
Geron Corporation (GERN - Free Report) currently has one candidate in its pipeline, imetelstat. Focus will be on the company’s pipeline expansion plans in addition to updates on imetelstat. Geron too has a mixed track record with the company surpassing expectations in two quarters and meeting expectations in the other two. This development-stage biotech company currently carries a Zacks Rank #3, which when combined with an ESP of 0.00% makes a surprise prediction difficult for this quarter (read more: Geron Q2 Earnings: What's in Store for the Stock?).
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Drug Stocks to Watch for Earnings on Aug 3: ZTS, EXEL & More
In the thick of Q2 earnings season, we see a clear trend of continuing earnings decline for the benchmark S&P 500 index – the fifth quarter in a row. As for beat ratios, they aren’t all that bad. Of the 317 S&P 500 companies that have reported so far (Jul 29), 72.9% surpassed earnings expectations while 53.6% topped revenue estimates.
Meanwhile, the focus is on the Medical sector, which is among the very few winners this season, with several pharma and biotech companies having already reported results. Our Q2 scorecard shows that 63.5% of the Medical sector has reported results with a blended beat of 75.8% (the percentage of companies that have beaten both EPS as well as revenue estimates) with the sector recording 5.4% earnings growth on revenue growth of 10.5%.
Per our Earnings Trends report, Medical is one of the six sectors expected to record earnings growth in Q2.
A look at the second-quarter performance of the Medical sector shows that companies like Johnson & Johnson (JNJ - Free Report) , Novartis AG, Abbott Laboratories, Biogen Inc., Amgen, AbbVie, Alexion, Bristol-Myers, and Celgene have topped expectations, while biotech major Gilead Sciences Inc. (GILD - Free Report) has reported disappointing results. While Gilead beat earnings by just a penny, revenues fell short of expectations. Gilead even lowered its product sales guidance for the year.
Still, several pharma and biotech companies are yet to report Q2 results. Let’s see what’s in store for these five drug stocks when they report their results on Aug 3.
What Awaits These Drug Stocks?
One of the leading global animal health companies, Zoetis Inc. (ZTS - Free Report) has an impressive track record with the company consistently beating earnings expectations. Will Zoetis be able to keep its earnings streak alive? This Zacks Rank #1 (Strong Buy) stock, which has an Earnings ESP of +2.27%, looks poised to beat expectations in Q2 as well. Focus will be on the performance of companion animal and livestock businesses along with an update on the guidance front (read more: Zoetis: Stock to Beat Earnings Estimates in Q2 Again).
ZOETIS INC Price and EPS Surprise
ZOETIS INC Price and EPS Surprise | ZOETIS INC Quote
Biotech company, Exelixis, Inc. (EXEL - Free Report) has a disappointing track record with the company missing expectations in three of the last four reported quarters. However, a surprise could be in store for Exelixis this earnings season. Exelixis’ Zacks Rank #3 (Hold) which when combined with an ESP of +3.70% makes us reasonably confident of a beat this quarter. This cancer focused company’s lead marketed product is Cometriq. Among other products are Cotellic and Cabometyx. The company is also working on label expansion of these drugs (read more: Exelixis Q2 Earnings Preview: Stock Likely to Gain?).
EXELIXIS INC Price and EPS Surprise
EXELIXIS INC Price and EPS Surprise | EXELIXIS INC Quote
Being a development-stage pharma company, Aerie Pharmaceuticals, Inc. does not have any approved product in its portfolio. In this scenario, investor focus will be on pipeline updates on its lead candidates – Rhopressa and Roclatan. Aerie’s performance so far has been mostly disappointing with the company missing expectations in three of the last four quarters. Though the stock’s Zacks Rank #3 increases the predictive power of the ESP, it also has an ESP of 0.00%, making a surprise prediction difficult (read more: What Awaits Aerie Pharmaceuticals in Q2 Earnings?).
AERIE PHARMACT Price and EPS Surprise
AERIE PHARMACT Price and EPS Surprise | AERIE PHARMACT Quote
Development-stage biotech company, Conatus Pharmaceuticals Inc.’s track record has been mixed with the company surpassing expectations on two occasions, while posting in-line results in the other two. Our proven model shows that Conatus is likely to beat estimates in Q2 as this Zacks Rank #3 stock currently has an ESP of +5.41%. With no approved product in Conatus’ portfolio at the moment, investor focus is expected to remain on the company’s progress with its lead liver disease candidate, emricasan (read more: Conatus May Surprise in Q2 Earnings: Stock to Gain?).
CONATUS PHARMA Price and EPS Surprise
CONATUS PHARMA Price and EPS Surprise | CONATUS PHARMA Quote
Geron Corporation (GERN - Free Report) currently has one candidate in its pipeline, imetelstat. Focus will be on the company’s pipeline expansion plans in addition to updates on imetelstat. Geron too has a mixed track record with the company surpassing expectations in two quarters and meeting expectations in the other two. This development-stage biotech company currently carries a Zacks Rank #3, which when combined with an ESP of 0.00% makes a surprise prediction difficult for this quarter (read more: Geron Q2 Earnings: What's in Store for the Stock?).
GERON CORP Price and EPS Surprise
GERON CORP Price and EPS Surprise | GERON CORP Quote
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