The first-quarter 2022 reporting cycle of the Medical sector has just started picking up the pace. The sector mainly comprises pharma/biotech and medical device companies.

The Earnings Trends report suggests that as of Apr 20, 7% of the companies in the Medical sector —representing 27.6% of the sector’s market capitalization —reported their quarterly earnings. While 100% participants beat on earnings, 75% outperform on revenues. Earnings and revenues increased 8.4% and 13.5% year over year, respectively. Overall, first-quarter earnings and sales of the Medical sector are expected to rise 10.3% and 13.3% each from the year-ago quarter’s respective reported figures.

The earnings season for the Medical sector kicked off last week when bellwether Johnson & Johnson reported mixed first-quarter results,with its bottom line beating estimates but the top line missing the mark. Its Pharmaceuticals unit sales fell short of expectations.

Earlier this week, both Roche and Novartis also reported first-quarter results. Like J&J, Novartis too beat on earnings but missed on sales. Whereas Roche boasted a solid sales performance for first-quarter 2022, primarily driven by strong demand for COVID-19 tests and newer medicines offsetting the declining sales of legacy drugs.

Merck (MRK Quick QuoteMRK - Free Report) , Eli Lilly (LLY Quick QuoteLLY - Free Report) , Sanofi (SNY Quick QuoteSNY - Free Report) , Gilead Sciences (GILD Quick QuoteGILD - Free Report) and Emergent BioSolutions (EBS Quick QuoteEBS - Free Report) are scheduled to release first-quarter earnings on Apr 28.

Let’s analyze the performance of the above-mentioned biotech/pharma companies.

Merck

Merck, which has a mixed earnings track record so far, is scheduled to report quarterly results, before the opening bell.

MRK’s earnings beat estimates in two of its trailing four quarters and missed the mark on the remaining two occasions, the average surprise being 5.3%. In the last reported quarter, Merck’s earnings beat estimates by 23.3%.

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

For the quarter to be reported, Merck has an Earnings ESP of +3.36% and a Zacks Rank #3, indicating a likely earnings surprise. The Zacks Consensus Estimate for earnings stands at $1.81 per share.

Merck and partner Ridgeback Biotherapeutics’ oral antiviral pill molnupiravir, authorized by the FDA in late 2021 for treating high-risk adults with mild-to-moderate COVID-19, is likely to have been a key contributor to top-line growth in the March quarter of 2022. Strong demand for cancer drugs like Keytruda and Lynparza is likely to have boosted MRK’s sales growth in the first quarter.

Eli Lilly

Eli Lilly, which has a negative earnings track record so far, is scheduled to report quarterly results, before market open.

LLY’s earnings missed estimates in each of the trailing four quarters, the average negative surprise being 3.9%. In the last reported quarter, Lilly’s earnings missed estimates by 0.8%.

Lilly has an Earnings ESP of 0.00% and a Zacks Rank #2. The Zacks Consensus Estimate for earnings stands at $2.32 per share.

In the first quarter, higher demand and volume growth for its key drugs, including Trulicity, Taltz, Verzenio, Jardiance, Olumiant and Emgality, are likely to have provided a top-line support. Solid demand for its key drugs is likely to have offset the generic competition from several other drugs.

Sanofi

Sanofi, which has an impressive earnings track record so far, is scheduled to report quarterly results, before market open.

SNY’s earnings beat estimates in each of the last four quarters, the average being 8.8%. In the last reported quarter, Sanofi’s earnings beat estimates by 4%.

For the quarter to be reported, Sanofi has an Earnings ESP of +0.89% and a Zacks Rank of 3, indicating a likely earnings surprise.

The Zacks Consensus Estimate for earnings stands at 94 cents per share. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dupixent, which Sanofi markets in partnership with Regeneron, is expected to be its key top-line driver in the first quarter.

Gilead Sciences

Gilead Sciences, which has a decent earnings history so far, is scheduled to report quarterly results after the closing bell.

GILD missed on earnings in three of its trailing four quarters and beat on the same just once, with the average surprise being 1.6%. In the last reported quarter, Gilead Sciences’ earnings missed estimates by 54.9%.

For the to-be-reported quarter, GILD has an Earnings ESP of +5.69% and a Zacks Rank #3. The Zacks Consensus Estimate for earnings stands at $1.77 per share.

Given the surge in COVID cases, sales of Veklury (remdesivir), an antiviral treatment for COVID-19, are likely to have increased or remained stable sequentially in the first quarter. The FDA recently approved the sNDA filing for Veklury’s use in the outpatient setting for patients at a high risk of disease progression.

Emergent BioSolutions

EBS, which has a mixed earnings record so far, is scheduled to report quarterly results after market close.

Emergent BioSolutions’ earnings beat estimates in two of its trailing four quarters and missed the mark on the other two occasions, the average negative surprise being 31.5%. In the last reported quarter, EBS’s earnings beat estimates by 15.7%.

EBS has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell). The Zacks Consensus Estimate for earnings stands at 23 cents per share.

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