Back to top

Image: Bigstock

4 Biotech Stocks Set to Outpace Q1 Earnings Estimates

Read MoreHide Full Article

While almost all big drugmakers have reported their results, a few smaller drug and biotech companies are yet to report this earnings season. As far as the large drug/biotech companies are concerned, the first-quarter earnings season has been a mixed bag. While J&J, AstraZeneca, Regeneron, Biogen and Pfizer beat estimates for both earnings and sales, Lilly, Novartis and Merck missed on both counts. Others like Gilead and Sanofi beat estimates for earnings while missing the same for sales. Glaxo’s earnings were in line but it missed sales estimates.

Sales of some drugs/vaccines/products, especially physician-administered, continued to be hurt by the coronavirus pandemic during the first quarter of 2021. Though some impact of the pandemic is expected to continue in the second quarter, the companies expect the demand for these products to accelerate in the second half of 2021. Meanwhile, companies that developed COVID-19 related vaccines or therapeutics have been riding high on huge market adoption of their products.

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 May 12, 94.4% of the companies in the Medical sector, constituting nearly 95.1% of the sector’s market capitalization, have reported earnings. While 76.5% beat earnings estimates, 62.7% beat the same for sales. Earnings increased 23% year over year on 9.8% higher revenues. Overall, first-quarter earnings for the Medical sector are expected to rise 24.9% on 10.2% sales increase.Collective business growth can be attributed to gradual lifting of restrictions, resulting in businesses nearing pre-pandemic normalcy.

Zeroing in on 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

BeyondSpring Inc. (BYSI - Free Report)

This New York-based biotech has an Earnings ESP of +14.25% and a Zacks Rank #3. The Zacks Consensus Estimate for the first quarter is pegged at a loss of 60 cents per share. BeyondSpring beat estimates in two of the last three quarters while missing in one with the average surprise being 0.51%.

BeyondSpring Inc. Price and EPS Surprise

BeyondSpring Inc. Price and EPS Surprise

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

AVROBIO, Inc. (AVRO - Free Report)

This Massachusetts-based biotech has as an Earnings ESP of +1.44% and a Zacks Rank of #3. The Zacks Consensus Estimate for the first quarter is pegged at a loss of 77 cents per share.

In the trailing four quarters, AVROBIO beat estimates in one quarter and missed in the other three with the average negative surprise being 8.08%.

AVROBIO, Inc. Price and EPS Surprise

AVROBIO, Inc. Price and EPS Surprise

AVROBIO, Inc. price-eps-surprise | AVROBIO, Inc. Quote

Beyond Air, Inc. (XAIR - Free Report)

This Garden City NY-based biotech has as an Earnings ESP of +11.23% and a Zacks Rank of #3. The Zacks Consensus Estimate for the first quarter is pegged at a loss of 33 cents per share.

In the trailing four quarters, Beyond Air’s earnings performance has been mixed with the company beating estimates in one quarter and missing the same in the other three with the average negative surprise being 8.78%.

Beyond Air, Inc. Price and EPS Surprise

Beyond Air, Inc. Price and EPS Surprise

Beyond Air, Inc. price-eps-surprise | Beyond Air, Inc. Quote

Fortress Biotech, Inc. (FBIO - Free Report)

This New York-based biotech has as an Earnings ESP of +10.58% and a Zacks Rank of #3. The Zacks Consensus Estimate for the first quarter is pegged at a loss of 17 cents per share.

Fortress Biotech’s earnings performance has been impressive with the company delivering an earnings surprise in all the trailing four quarters, the average beat being 50.81%.

Fortress Biotech, Inc. Price and EPS Surprise

Fortress Biotech, Inc. Price and EPS Surprise

Fortress Biotech, Inc. price-eps-surprise | Fortress Biotech, Inc. Quote

Zacks' Top Picks to Cash in on Artificial Intelligence

In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.

See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>