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Drug Stock Q1 Earnings Releases on May 4: ZTS, REGN & More

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The Q1 earnings season is past the halfway mark. Overall, earnings and revenue growth has been better than investors’ expectations. We believe this quarter is on track to see the highest growth in many years. According to the Earnings Preview report, 288 S&P 500 members, accounting for 63.8% of the index’s total market capitalization, have reported results as of Apr 28, 2017.

Total earnings for these 288 index members were up 13.7% from the year-ago quarter on an 8.2% improvement in revenues. The beat ratio was 76.4% for earnings and 68.1% for revenues.

Per the report, total earnings for S&P 500 companies are expected to grow 11.2% year over year on 6.2% higher revenues. Note that estimates for the current period (second-quarter 2017) are also looking up.

With regard to the broader medical sector, which includes the pharma/biotech as well as medical device companies, total earnings for medical companies are expected to grow 3.1% year over year on 6.3% higher revenues.

Johnson & Johnson (JNJ - Free Report) began the earnings season for the pharma sector with a lower-than-expected performance in the first quarter. This left the investment community worrying about the performance of the other pharma companies in the quarter. However, performance of the large pharma companies that reported last week and this week so far indicates that the picture is not as bad as anticipated.

Among the pharma bigwigs that reported last week, Bristol-Myers Squibb Company, Vertex Pharmaceuticals Incorporated, AbbVie and Biogen, Inc. reported better-than-expected Q1 results. However, it was a mixed quarter for Amgen, Inc., Celgene Corporation and Eli Lilly and Company as all three beat earnings expectations but missed sales estimates.

Pfizer, Inc. (PFE - Free Report) and Merck & Co., Inc. (MRK - Free Report) reported first quarter results this week. Pfizer had a mixed first quarter as it beat earnings estimates while missing the same on sales. Merck beat estimates for both earnings and sales and also raised its 2017 earnings and sales guidance.

Here we have four pharma companies that are set to report first-quarter results on May 4. Let's see how things are shaping up for them.

Zoetis, Inc. (ZTS - Free Report)

Zoetis, which is scheduled to release earnings before the opening bell, delivered a positive earnings surprise of 4.44% in the last quarter. Zoetis’s performance has been pretty impressive, with the company reporting positive surprises consistently. The average earnings beat over the last four quarters is 11.48%.

For this quarter, Zoetis has an Earnings ESP of -2.08% and a Zacks Rank #3 (Hold). The Zacks Consensus Estimate is pegged at 48 cents per share.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zoetis’ companion animal business has been performing well. It expects to see stronger growth from its companion animal portfolio in 2017 driven by its dermatology portfolio, Apoquel and Cytopoint, further penetration of Simparica, and ongoing uptake of new vaccines. (Read More: What's in Store for Zoetis Stock This Earnings Season?)

Regeneron Pharmaceuticals, Inc. (REGN - Free Report)

Regeneron is scheduled to announce results before the opening bell. Last quarter, the company delivered a negative earnings surprise of 12.75%. Regeneron’s performance has been decent, with earnings beating expectations thrice in the four trailing quarters. Overall, the company has delivered a four-quarter average positive surprise of 8.08%.

The company has an Earnings ESP of 0.00% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate is pegged at $2.50 per share.

On the first-quarter earnings call, focus will be on the performance of key drugs Eylea and Praluent. During the quarter, the FDA approved its Dupixent (dupilumab) injection for the treatment of adults with moderate-to-severe atopic dermatitis (AD). (Read More: Regeneron to Post Q1 Earnings: What's in the Cards?).

Incyte Corporation (INCY - Free Report)

The company is also expected to report before market opens. In the last reported quarter, Incyte recorded a positive earnings surprise of 7.14%. The company posted an average positive earnings surprise of 329.05% for the four trailing quarters.

The company has an Earnings ESP of +1.04% but a Zacks Rank #4 (Sell).The Zacks Consensus Estimate is pegged at a loss of 96 cents for the first quarter.

Intercept Pharmaceuticals, Inc.

Intercept Pharma is also expected to report before the opening bell. In the last reported quarter, Intercept Pharma recorded a negative earnings surprise of 35.20%. Overall, the company has posted an average negative earnings surprise of 2.06% in the four trailing quarters.

The company has an Earnings ESP of +9.13% and a Zacks Rank #4.The Zacks Consensus Estimate is pegged at a loss of $4.27 per share.

We expect investors to remain focused on sales ramp-up of Ocaliva and pipeline updates on Intercept’s first-quarter call. (Read More: Is Intercept Poised for a Beat This Earnings Season?)

Our previous article showed that Intercept was likely to beat on earnings this quarter. However, the rank changed thereafter and we are now not sure of an earnings beat this season.

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