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Drug, Biotech Stocks' Q2 Earnings on Aug 4: LLY, AMGN & More

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This is the busiest week for the drug/biotech sector this earnings season. Overall, it has been a rather better-than-expected earnings season so far for the drug and biotech sector. Most large drugmakers beat estimates for earnings as well as sales. Many companies like Merck, AstraZeneca and Glaxo raised their sales guidance for the year, while Sanofi upped its earnings growth expectations.

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 Jul 27, 25% of the Medical sector companies, constituting nearly 41.2% of the sector’s market capitalization, reported earnings. While 85.7% of the companies beat on earnings, 78.6% surpassed revenue estimates. Earnings increased 5.1% year over year, while revenues rose 10.7%.

Overall, second-quarter earnings of the Medical sector are expected to rise 1.1%, while revenues are projected to increase 7.9%.

Though several large drug/biotechs have already reported their earnings results, some like  Eli Lilly & Company (LLY - Free Report) , Amgen (AMGN - Free Report) , Vertex Pharmaceuticals Incorporated (VRTX - Free Report) and Novo Nordisk (NVO - Free Report)  are set to report second-quarter results on Aug 4.

Eli Lilly & Company

This large drugmaker’s earnings performance has been rather weak, with the company missing earnings expectations in three of the last four quarters while beating in one. Lilly delivered a four-quarter earnings surprise of 2.26%, on average. In the last reported quarter, the company delivered an earnings surprise of 12.93%.

Eli Lilly and Company Price and EPS Surprise

Eli Lilly and Company Price and EPS Surprise

 

 

 

 

 

 

 

 

Eli Lilly and Company price-eps-surprise | Eli Lilly and Company Quote

Per our proven model, companies with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) have a good chance of delivering an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Lilly has an Earnings ESP of -0.74% and a Zacks Rank #2. The Zacks Consensus Estimate for earnings stands at $1.80 per share.

Higher demand for its key drugs including Trulicity, Taltz, Verzenio, Jardiance, Olumiant, and Emgality is likely to have offset generic competition for several other drugs and may have boosted Lilly’s second-quarter sales. R&D costs are expected to have increased due to higher costs for late-stage pipeline candidates, mainly the Alzheimer’s program.

Amgen

This large biotech’s performance has been strong with earnings beating estimates in all the trailing four quarters. The company delivered a four-quarter earnings surprise of 5.68%, on average. In the last reported quarter, the company delivered an earnings surprise of 0.71%.

Amgen Inc. Price and EPS Surprise

Amgen Inc. Price and EPS Surprise

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

This Zacks Rank #3 company has an Earnings ESP of -0.97%. The Zacks Consensus Estimate stands at $4.40 per share.

In the second quarter, volume growth from Amgen’s key drugs like Prolia, Xgeva, Repatha, and others is expected to have been partially offset by biosimilar/generic competition for mature drugs.

Vertex Pharmaceuticals

This large-cap biotech’s performance has been pretty impressive, with its earnings beating estimates in three of the trailing four quarters, but missing the mark in one. The company has a four-quarter earnings surprise of 7.56%, on average. In the last reported quarter, VRTX delivered a negative earnings surprise of 2.22%.

This Zacks Rank #3 company has an Earnings ESP of -1.33%. The Zacks Consensus Estimate for earnings stands at $3.48 per share.

Revenue growth in the second quarter of 2022 is likely to have been driven by a rapid uptake of Vertex’s newest cystic fibrosis medicine Trikafta/Kaftrio. Higher sales of Trikafta are likely to have caused sales erosion of Vertex’s other cystic fibrosis drugs, namely Kalydeco, Orkambi and Symdeko/Symkevi

Novo Nordisk

The company’s earnings surprise history has been excellent so far, with its earnings beating the Zacks Consensus Estimate in each of the trailing four quarters, the average being 7.56%. In the last reported quarter, Novo Nordisk delivered an earnings beat of 10.59%.

Novo Nordisk AS Price and EPS Surprise

Novo Nordisk AS Price and EPS Surprise

Novo Nordisk AS price-eps-surprise | Novo Nordisk AS Quote

This Zacks Rank #3 company has an Earnings ESP of -4.05%. The Zacks Consensus Estimate for earnings stands at 87 cents per share.

Novo Nordisk’s second-quarter sales are likely to have been driven by higher sales of Diabetes and Obesity Care products. Higher costs driven by clinical activity for late-stage studies are likely to have escalated NVO’s research and development costs in the second quarter.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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