The earnings picture has come out reasonably well as we stand halfway through the second-quarter earnings season. A few large pharma/biotech companies have reported results and these indicate signs of recovery as lockdown restrictions ease and demand normalizes. Bellwether
Johnson & Johnson ( JNJ Quick Quote JNJ - Free Report) beat on both earnings and revenues with broad-based growth. Pfizer too came out with strong results, riding high on the success of its COVID-19 vaccine. Swiss pharma giant Novartis ( NVS Quick Quote NVS - Free Report) reported mixed results for the second quarter as the business gradually recovers from the impacts of the coronavirus pandemic. Biotech giant Biogen also beat on both earnings and sales in the second quarter. Moreover, the outlooks provided by most of these companies are encouraging.
Per the Zacks classification, the pharma/biotech industry comes under the broader
Medical sector, which comprises pharma/biotech as well as medical device companies.
Earnings Trends report, as of Jul 28, 29.1% of the companies in the Medical sector, constituting nearly 50.5% of the sector’s market capitalization, have reported earnings. While 93.8% beat earnings estimates, 100% beat the same for sales. Earnings increased 12.2% year over year on 20.2% higher revenues. Overall, second-quarter earnings for the Medical sector are expected to rise 23.2% on an 18.4% sales increase. 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 to Beat Ironwood Pharmaceuticals ( IRWD Quick Quote IRWD - Free Report)
This Boston-based biotech has an Earnings ESP of +11.11% and a Zacks Rank #2. The Zacks Consensus Estimate for the second quarter is pegged at 23 cents per share. Ironwood beat estimates in all the last four quarters with the average surprise being 51.68%.
Bausch Health ( BHC Quick Quote BHC - Free Report)
Bausch Health has an Earnings ESP of +1.85% and a Zacks Rank #2. The Zacks Consensus Estimate for the second quarter is pegged at 97 cents per share. Bausch beat estimates in three of the last four quarters and missed in the remaining one, the average surprise being 7.53%.
Regeneron Pharmaceuticals ( REGN Quick Quote REGN - Free Report)
Biotech giant Regeneron has an Earnings ESP of +12.64% and a Zacks Rank #3. The Zacks Consensus Estimate for second-quarter earnings is pegged at $19.55 per share. Regeneron beat estimates in the last four quarters, the average surprise being 14.4%.
Zoetis ( ZTS Quick Quote ZTS - Free Report)
Zoetis has an Earnings ESP of +4.32%. The Zacks Consensus Estimate for the second quarter is pegged at $1.08 per share. Zoetis beat estimates in the last four quarters with an average surprise of 21.35%.
Zoetis Inc. Price and EPS Surprise