The fourth-quarter earnings season for pharma stocks has started with
Johnson & Johnson ( JNJ Quick Quote JNJ - Free Report) reporting encouraging results earlier this week. However, sales of another big pharma player, Novartis, which also reported earlier this week, were dampened as COVID-19 negatively impacted demand. Its sales rose just 3% year over year.
Small and large drugmakers as well as biotech companies form part of the wider
Medical sector, which comprises medical device companies as well.
Earnings Trends report, published earlier this week, stated that the companies from the Medical sector are projected to deliver 8.2% year over year earnings growth on expected 11.4% improvement in sales in the fourth quarter. Demand for several drugs is expected to have recovered in the quarter under review.
In the fourth quarter, vaccine candidates of Moderna, Pfizer/BioNTech and AstraZeneca received approval in some countries. A reviving economy and anticipated cash flow from coronavirus vaccine/treatment commercialization bode well for these companies. New drugs and label expansions of blockbuster drugs are expected to have driven the top line of most big shots, backed by higher demand and in the process, combating generic plus biosimilar competition for older medicines. However, the extent of the impact of resurgence of COVID-19 cases on physician-administered drugs can be gauged when the companies report.
Zeroing in on Winners
Here we have highlighted five pharma/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 maximum chances 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 ideal combination, chances of an earnings surprise are as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our
Earnings ESP Filter. 5 Pharma/Biotech Stocks That Match the Criteria Eli Lilly and Company ( LLY Quick Quote LLY - Free Report)
This Indianapolis-based multinational pharmaceutical boasting a diversified product profile has an Earnings ESP of +2.13% and a Zacks Rank of 3. The Zacks Consensus Estimate for the fourth quarter is pegged at $2.35 per share. The company is scheduled to release results on Jan 29.
Lilly’s earnings beat estimates in three of the last four quarters and missed the same once, the average surprise being 8.46%.
Merck Co., Inc. ( MRK Quick Quote MRK - Free Report)
This Kenilworth, NJ-based pharmaceutical company has an Earnings ESP of +2.21% and a Zacks Rank #2. You can see
. the complete list of today’s Zacks #1 Rank stocks here
The Zacks Consensus Estimate for the fourth quarter is pegged at $1.36 per share. The company is scheduled to release results on Feb 4.
Merck’s earnings performance has been impressive with the company delivering an earnings surprise in all the trailing four quarters, the average being 12.67%.
Sanofi ( SNY Quick Quote SNY - Free Report)
This France-based company focusing on major therapeutic areas such as cardiovascular, immunology, oncology and diabetes, among others has an Earnings ESP of +8.52% and is #3 Ranked. The Zacks Consensus Estimate for the fourth quarter is pegged at 88 cents per ADS. The company is scheduled to release results on Feb 5.
In the trailing four quarters, Sanofi delivered an earnings surprise in two of the last four quarters and missed estimates twice, the average beat being 4.02%.
Vertex Pharmaceuticals Incorporated ( VRTX Quick Quote VRTX - Free Report)
This Foster City, CA-based biotech developing therapies for cystic fibrosis has an Earnings ESP of +5.39% and a Zacks Rank #2. The Zacks Consensus Estimate for the fourth quarter is pegged at $2.65 per share. The company is scheduled to release results on Feb 1.
Vertex boasts a stellar earnings record. Its earnings beat expectations in all the last four quarters, the average being 28.35%.
Gilead Sciences, Inc. ( GILD Quick Quote GILD - Free Report)
This Bothell, WA-based biotechnology company developing drugs for the treatment of human immunodeficiency virus, liver diseases, hematology/oncology diseases and inflammation/respiratory diseases, has an Earnings ESP of +3.89% and is Zacks #3 Ranked. The Zacks Consensus Estimate for the fourth quarter is pegged at $2.06 per share. The company is scheduled to release results on Feb 4.
Gilead’s bottom line beat estimates in two of the trailing four quarters and missed the same twice, the average negative surprise being 6.24%.
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