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Healthcare Q1 results seem robust given that total earnings for the quarter as a whole are expected to be up 24.6% on revenue growth of 10% (see: all the Healthcare ETFs here).
Many industry bigwigs reported mixed results with some beating on earnings or revenues or both, while a few missed the estimates on both fronts. Many of them lifted the outlook for the full year. Let’s delve deeper into a few of them:
Earnings in Focus
Johnson and Johnson
The world's biggest healthcare products’ maker continued its long streak of earnings beat and outpaced revenue estimates. Earnings per share came in at $2.59, beating the Zacks Consensus Estimate of $2.31 and improving 12.6% from the year-ago quarter. Revenues grew 7.9% year over year to $22.3 billion and edged past the Zacks Consensus Estimate of $21.82 billion. For 2021, Johnson & Johnson narrowed its revenue range from $90.5-$91.7 billion to $90.6-$91.6 billion, indicating a year-over-year increase of 9.7-10.9%. The earnings per share guidance range has been revised from $9.40-$9.60 to $9.42-$9.57, representing year-over-year growth of 17.3-19.2% (read: Healthcare ETFs in Focus Post JNJ's Q1 Earnings Results).
Pfizer
Pfizer also topped on both fronts. Earnings per share of 93 cents were well above the Zacks Consensus Estimate of 79 cents. Revenues of $14.58 billion edged past the consensus mark of $13.49 billion. On a year-over-year basis, earnings and revenues increased 47% and 45%, respectively. The U.S. drug giant raised its revenue guidance to $70.5-$72.5 billion from $59.4-$61.4 billion, indicating year-over-year growth of 71%, and earnings guidance to $3.55-$3.65 from $3.10-$3.20 per share, indicating year-over-year growth of 59%, for 2021.
Merck
Merck reported weaker-than-expected results. Earnings per share of $1.40 missed the Zacks Consensus Estimate of $1.63 and declined 7% from the year-ago quarter. Revenues were flat year over year at $12.08 billion and below the consensus mark of $12.84 billion. For 2021, Merck maintained its revenue guidance in the range of $51.8-$53.8 billion, which indicates year-over year growth of 8-12%, while adjusted earnings are expected in the range of $6.48-$6.68 per share.
Bristol-Myers
Bristol-Myers also missed on both fronts. It reported earnings per share of $1.74, 6 cents below the Zacks Consensus Estimate but a couple of cents higher than the year-ago earnings. Revenues grew 4% year over year to $11.07 billion and fell shy of the Zacks Consensus Estimate of $11.11 billion. The company reiterated its earnings per share guidance to $7.35-$7.55.
Eli Lilly
Eli Lilly also came up with weaker results. Earnings of $1.87 per share lagged the Zacks Consensus Estimate of $2.12 but increased 16% from the year-ago quarter. Revenues climbed 16% to $6.81 billion but came below of the estimated $6.89 billion. Eli Lilly narrowed its 2021 outlook. It tightened the guidance range to $26.6-$27.6 billion from $26.5-$28 billion for revenues and $7.80-$8.00 from $7.75-$8.40 for earnings per share (read: Are Healthcare ETFs Poised for a Comeback?).
ETF Angle
The slew of Q1 results have led to mixed trading in pharma ETFs over the past month. Below we have highlighted those in detail.
This ETF provides exposure to 45 U.S. companies that manufacture prescription or over-the-counter drugs or vaccines by tracking the Dow Jones U.S. Select Pharmaceuticals Index. The in-focus five firms are the top 10 holdings in the basket, accounting for a combined 56.2% of the total assets, suggesting heavy concentration. The product has $362.3 million in AUM and charges 42 bps in fees and expense. Volume is light as it exchanges about 7,000 shares a day. The fund has gained 3.2% in a month and has a Zacks ETF Rank #3 (Hold) with a High risk outlook.
This fund offers exposure to companies that are principally engaged in the research, development, manufacture, sale or distribution of pharmaceuticals and drugs of all types. It follows the Dynamic Pharmaceuticals Intellidex Index and holds 27 stocks in its basket with the in-focus five firms collectively making up for around 5% share each. The product has AUM of about $361.2 million and sees a lower volume of around 19,000 shares a day. The fund charges 56 bps in fees and expenses. The ETF has shed 0.1% in a month and carries a Zacks ETF Rank #3 with a High risk outlook (read: ETFs to Tap Amgen's Drive for Cancer Deal).
This fund provides exposure to pharma companies by tracking the S&P Pharmaceuticals Select Industry Index. With AUM of $253.1 million, it trades in a moderate volume of around 55,000 shares a day and charges 35 bps in fees a year. In total, the product holds 49 securities with the in-focus firms making up for at least 4% share each. It has added 0.1% in the same period and has a Zacks ETF Rank #3 with a High risk outlook.
This ETF follows the MVIS US Listed Pharmaceutical 25 Index and holds 24 stocks in its basket. The in-focus five firms account for at least 5% share each. The product has amassed $219 million in its asset base and trades in a good volume of about 176,000 shares a day. Expense ratio is 0.35%. The fund has gained 4.1% in a month and carries a Zacks ETF Rank #3 with a Medium risk outlook.
This fund tracks the Nasdaq US Smart Pharmaceuticals Index, holding 30 securities in its basket. The in-focus firms account for a combined 29.6% of the assets. FTXH has a lower level of $22 million in AUM and an average daily volume of 10,000 shares. It charges 60 bps in annual fees and has added 0.2% in the same time frame. The product has a Zacks ETF Rank #3.
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Pharma ETFs in Focus Post Q1 Earnings
Healthcare Q1 results seem robust given that total earnings for the quarter as a whole are expected to be up 24.6% on revenue growth of 10% (see: all the Healthcare ETFs here).
Many industry bigwigs reported mixed results with some beating on earnings or revenues or both, while a few missed the estimates on both fronts. Many of them lifted the outlook for the full year. Let’s delve deeper into a few of them:
Earnings in Focus
Johnson and Johnson
The world's biggest healthcare products’ maker continued its long streak of earnings beat and outpaced revenue estimates. Earnings per share came in at $2.59, beating the Zacks Consensus Estimate of $2.31 and improving 12.6% from the year-ago quarter. Revenues grew 7.9% year over year to $22.3 billion and edged past the Zacks Consensus Estimate of $21.82 billion. For 2021, Johnson & Johnson narrowed its revenue range from $90.5-$91.7 billion to $90.6-$91.6 billion, indicating a year-over-year increase of 9.7-10.9%. The earnings per share guidance range has been revised from $9.40-$9.60 to $9.42-$9.57, representing year-over-year growth of 17.3-19.2% (read: Healthcare ETFs in Focus Post JNJ's Q1 Earnings Results).
Pfizer
Pfizer also topped on both fronts. Earnings per share of 93 cents were well above the Zacks Consensus Estimate of 79 cents. Revenues of $14.58 billion edged past the consensus mark of $13.49 billion. On a year-over-year basis, earnings and revenues increased 47% and 45%, respectively. The U.S. drug giant raised its revenue guidance to $70.5-$72.5 billion from $59.4-$61.4 billion, indicating year-over-year growth of 71%, and earnings guidance to $3.55-$3.65 from $3.10-$3.20 per share, indicating year-over-year growth of 59%, for 2021.
Merck
Merck reported weaker-than-expected results. Earnings per share of $1.40 missed the Zacks Consensus Estimate of $1.63 and declined 7% from the year-ago quarter. Revenues were flat year over year at $12.08 billion and below the consensus mark of $12.84 billion. For 2021, Merck maintained its revenue guidance in the range of $51.8-$53.8 billion, which indicates year-over year growth of 8-12%, while adjusted earnings are expected in the range of $6.48-$6.68 per share.
Bristol-Myers
Bristol-Myers also missed on both fronts. It reported earnings per share of $1.74, 6 cents below the Zacks Consensus Estimate but a couple of cents higher than the year-ago earnings. Revenues grew 4% year over year to $11.07 billion and fell shy of the Zacks Consensus Estimate of $11.11 billion. The company reiterated its earnings per share guidance to $7.35-$7.55.
Eli Lilly
Eli Lilly also came up with weaker results. Earnings of $1.87 per share lagged the Zacks Consensus Estimate of $2.12 but increased 16% from the year-ago quarter. Revenues climbed 16% to $6.81 billion but came below of the estimated $6.89 billion. Eli Lilly narrowed its 2021 outlook. It tightened the guidance range to $26.6-$27.6 billion from $26.5-$28 billion for revenues and $7.80-$8.00 from $7.75-$8.40 for earnings per share (read: Are Healthcare ETFs Poised for a Comeback?).
ETF Angle
The slew of Q1 results have led to mixed trading in pharma ETFs over the past month. Below we have highlighted those in detail.
iShares U.S. Pharmaceuticals ETF (IHE - Free Report)
This ETF provides exposure to 45 U.S. companies that manufacture prescription or over-the-counter drugs or vaccines by tracking the Dow Jones U.S. Select Pharmaceuticals Index. The in-focus five firms are the top 10 holdings in the basket, accounting for a combined 56.2% of the total assets, suggesting heavy concentration. The product has $362.3 million in AUM and charges 42 bps in fees and expense. Volume is light as it exchanges about 7,000 shares a day. The fund has gained 3.2% in a month and has a Zacks ETF Rank #3 (Hold) with a High risk outlook.
Invesco Dynamic Pharmaceuticals ETF (PJP - Free Report)
This fund offers exposure to companies that are principally engaged in the research, development, manufacture, sale or distribution of pharmaceuticals and drugs of all types. It follows the Dynamic Pharmaceuticals Intellidex Index and holds 27 stocks in its basket with the in-focus five firms collectively making up for around 5% share each. The product has AUM of about $361.2 million and sees a lower volume of around 19,000 shares a day. The fund charges 56 bps in fees and expenses. The ETF has shed 0.1% in a month and carries a Zacks ETF Rank #3 with a High risk outlook (read: ETFs to Tap Amgen's Drive for Cancer Deal).
SPDR S&P Pharmaceuticals ETF (XPH - Free Report)
This fund provides exposure to pharma companies by tracking the S&P Pharmaceuticals Select Industry Index. With AUM of $253.1 million, it trades in a moderate volume of around 55,000 shares a day and charges 35 bps in fees a year. In total, the product holds 49 securities with the in-focus firms making up for at least 4% share each. It has added 0.1% in the same period and has a Zacks ETF Rank #3 with a High risk outlook.
VanEck Vectors Pharmaceutical ETF (PPH - Free Report)
This ETF follows the MVIS US Listed Pharmaceutical 25 Index and holds 24 stocks in its basket. The in-focus five firms account for at least 5% share each. The product has amassed $219 million in its asset base and trades in a good volume of about 176,000 shares a day. Expense ratio is 0.35%. The fund has gained 4.1% in a month and carries a Zacks ETF Rank #3 with a Medium risk outlook.
First Trust Nasdaq Pharmaceuticals ETF (FTXH - Free Report)
This fund tracks the Nasdaq US Smart Pharmaceuticals Index, holding 30 securities in its basket. The in-focus firms account for a combined 29.6% of the assets. FTXH has a lower level of $22 million in AUM and an average daily volume of 10,000 shares. It charges 60 bps in annual fees and has added 0.2% in the same time frame. The product has a Zacks ETF Rank #3.
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