We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Third-quarter results of the healthcare sector have been unimpressive, with earnings of companies that have reported so far down 17.8% on 4.3% revenue growth. However, the earnings beat ratio of 77.4% and revenue beat ratio of 61.3% are quite assuring. Combining the actual results with the estimates for the still-to-report companies, the total earnings of the sector are expected to decline 18.6% despite revenue growth of 5.5%.
Many industry bigwigs reported solid results, with some beating on earnings or revenues or both. Despite this, pharma ETFs have been in the red over the past month. VanEck Vectors Pharmaceutical ETF (PPH - Free Report) , iShares U.S. Pharmaceuticals ETF (IHE - Free Report) , Invesco Dynamic Pharmaceuticals ETF (PJP - Free Report) , SPDR S&P Pharmaceuticals ETF (XPH - Free Report) and First Trust Nasdaq Pharmaceuticals ETF (FTXH - Free Report) have plunged 2.1%, 0.9%, 0.8%, 4.6% and 2.4%, respectively, in a month.
Let’s delve deeper into the earnings of some of the bigwigs:
Earnings in Focus
Johnson and Johnson
Johnson & Johnson (JNJ) continued with its long streak of earnings beat. Earnings per share came in at $2.66, beating the Zacks Consensus Estimate of $2.52 and improving 19.3% from the year-ago quarter. Revenues grew 6.8% year over year to $21.4 billion and edged past the Zacks Consensus Estimate of $21 billion. For 2023, Johnson & Johnson lifted the lower end of the revenue guidance to $83.6-$84 billion from the previous forecast of $83.2-$84 billion. It also raised the earnings per share guidance to $10.07-$10.13 from its previous outlook of $10.00-$10.10 (read: JNJ Beats Q3 Earnings Estimates, Raises View: ETFs in Focus).
Pfizer
Pfizer (PFE) topped estimates on the bottom line but missed on revenues. It reported an adjusted loss per share of 17 cents, narrower than the Zacks Consensus Estimate of a loss of 32 cents per share. In the year-ago quarter, the company had recorded earnings of $1.78 per share. Revenues declined 42% year over year to $13.23 billion and fell short of the consensus mark of $13.77 billion. The U.S. drug giant slashed its revenue guidance to $58-$61.0 billion from $67-$70.0 billion and adjusted earnings per share guidance to $1.45-$1.65 from $3.25-$3.45.
Merck
Merck (MRK) reported better-than-expected results. Earnings per share of $2.13 beat the Zacks Consensus Estimate of $1.94 and came in 15% higher than the year-ago period. Revenues rose 7% year over year to $15.96 billion and came in above the consensus mark of $15.38 billion. Merck lifted its 2023 revenue outlook to $59.7-$60.2 billion from $58.6-$59.6 billion. Adjusted earnings per share are now expected to be between $1.33 and $1.38 after accounting for upfront charges of $1.70 per share for the latest deal with Daiichi Sankyo. Previously, the company expected adjusted earnings to be between $2.95 and $3.05 per share, which excluded the Daiichi Sankyo charge.
Bristol-Myers
Bristol-Myers (BMY) also reported robust results. It posted earnings per share of $2.00, which outpaced the Zacks Consensus Estimate of $1.76 and marginally improved from the year-ago earnings of $1.99. Revenues declined 2% year over year to $10.97 billion but edged past the Zacks Consensus Estimate of $10.94 billion. Bristol-Myers raised the lower end of the earnings per share guidance to $7.50-$7.65 from $7.35-$7.65 for 2023. It still expects revenues to decrease in low single digits.
Eli Lilly and Company
Eli Lilly and Company (LLY) topped estimates on both fronts. Earnings per share came in at 10 cents against the Zacks Consensus Estimate of a loss of 8 cents. Eli Lilly had recorded earnings of $1.98 per share in the year-ago quarter. Revenues rose 37% to $9.5 billion and edged past the estimate of $8.9 billion. The pharma giant slashed its 2023 adjusted earnings per share guidance to $6.50-$6.70 from the previous range of $9.70-$9.90. It reiterated its revenue forecast in the range of $33.4 billion to $33.9 billion (read: Eli Lilly Beats on Q3 Earnings: ETFs to Buy).
VanEck Vectors Pharmaceutical ETF follows the MVIS US Listed Pharmaceutical 25 Index and holds 26 stocks in its basket. The five firms collectively account for 28.7% share in the fund’s basket. The product has amassed $382.1 million in its asset base and trades in a good volume of about 113,000 shares a day. The expense ratio is 0.36%.
VanEck Vectors Pharmaceutical ETF carries a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
iShares U.S. Pharmaceuticals ETF provides exposure to 34 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 holdings in the basket, accounting for a combined 63.4% of the total assets, suggesting heavy concentration (see: all the Healthcare ETFs here).
iShares U.S. Pharmaceuticals ETF has $550.6 million in AUM and charges 40 bps in fees and expense. Volume is light as it exchanges about 15,000 shares a day. The fund carries a Zacks ETF Rank #2 (Buy), with a High risk outlook.
Invesco Dynamic Pharmaceuticals ETF 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 25 stocks in its basket, with the in-focus firms making up nearly 5-7% share each.
Invesco Dynamic Pharmaceuticals ETF has AUM of about $248.5 million and sees a lower volume of around 8,000 shares a day. The fund charges 57 bps in fees and expenses. The ETF has a Zacks ETF Rank #3 (Hold) with a High risk outlook.
SPDR S&P Pharmaceuticals ETF provides exposure to pharma companies by tracking the S&P Pharmaceuticals Select Industry Index. With AUM of $173.1 million, it trades in a moderate volume of around 35,000 shares a day and charges 35 bps in fees a year.
SPDR S&P Pharmaceuticals ETF holds 39 securities, with the in-focus firms making up for 23.6% share combined. It has a Zacks ETF Rank #3 with a High risk outlook.
First Trust Nasdaq Pharmaceuticals ETF tracks the Nasdaq US Smart Pharmaceuticals Index, holding 50 securities in its basket. The in-focus four firms account for a combined 32.2% of the assets. FTXH has a lower level of $19.6 million in AUM and an average daily volume of 6,000 shares.
First Trust Nasdaq Pharmaceuticals ETF charges 60 bps in annual fees and has a Zacks ETF Rank #3.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Pharma ETFs in Focus Post Q3 Earnings
Third-quarter results of the healthcare sector have been unimpressive, with earnings of companies that have reported so far down 17.8% on 4.3% revenue growth. However, the earnings beat ratio of 77.4% and revenue beat ratio of 61.3% are quite assuring. Combining the actual results with the estimates for the still-to-report companies, the total earnings of the sector are expected to decline 18.6% despite revenue growth of 5.5%.
Many industry bigwigs reported solid results, with some beating on earnings or revenues or both. Despite this, pharma ETFs have been in the red over the past month. VanEck Vectors Pharmaceutical ETF (PPH - Free Report) , iShares U.S. Pharmaceuticals ETF (IHE - Free Report) , Invesco Dynamic Pharmaceuticals ETF (PJP - Free Report) , SPDR S&P Pharmaceuticals ETF (XPH - Free Report) and First Trust Nasdaq Pharmaceuticals ETF (FTXH - Free Report) have plunged 2.1%, 0.9%, 0.8%, 4.6% and 2.4%, respectively, in a month.
Let’s delve deeper into the earnings of some of the bigwigs:
Earnings in Focus
Johnson and Johnson
Johnson & Johnson (JNJ) continued with its long streak of earnings beat. Earnings per share came in at $2.66, beating the Zacks Consensus Estimate of $2.52 and improving 19.3% from the year-ago quarter. Revenues grew 6.8% year over year to $21.4 billion and edged past the Zacks Consensus Estimate of $21 billion. For 2023, Johnson & Johnson lifted the lower end of the revenue guidance to $83.6-$84 billion from the previous forecast of $83.2-$84 billion. It also raised the earnings per share guidance to $10.07-$10.13 from its previous outlook of $10.00-$10.10 (read: JNJ Beats Q3 Earnings Estimates, Raises View: ETFs in Focus).
Pfizer
Pfizer (PFE) topped estimates on the bottom line but missed on revenues. It reported an adjusted loss per share of 17 cents, narrower than the Zacks Consensus Estimate of a loss of 32 cents per share. In the year-ago quarter, the company had recorded earnings of $1.78 per share. Revenues declined 42% year over year to $13.23 billion and fell short of the consensus mark of $13.77 billion. The U.S. drug giant slashed its revenue guidance to $58-$61.0 billion from $67-$70.0 billion and adjusted earnings per share guidance to $1.45-$1.65 from $3.25-$3.45.
Merck
Merck (MRK) reported better-than-expected results. Earnings per share of $2.13 beat the Zacks Consensus Estimate of $1.94 and came in 15% higher than the year-ago period. Revenues rose 7% year over year to $15.96 billion and came in above the consensus mark of $15.38 billion. Merck lifted its 2023 revenue outlook to $59.7-$60.2 billion from $58.6-$59.6 billion. Adjusted earnings per share are now expected to be between $1.33 and $1.38 after accounting for upfront charges of $1.70 per share for the latest deal with Daiichi Sankyo. Previously, the company expected adjusted earnings to be between $2.95 and $3.05 per share, which excluded the Daiichi Sankyo charge.
Bristol-Myers
Bristol-Myers (BMY) also reported robust results. It posted earnings per share of $2.00, which outpaced the Zacks Consensus Estimate of $1.76 and marginally improved from the year-ago earnings of $1.99. Revenues declined 2% year over year to $10.97 billion but edged past the Zacks Consensus Estimate of $10.94 billion. Bristol-Myers raised the lower end of the earnings per share guidance to $7.50-$7.65 from $7.35-$7.65 for 2023. It still expects revenues to decrease in low single digits.
Eli Lilly and Company
Eli Lilly and Company (LLY) topped estimates on both fronts. Earnings per share came in at 10 cents against the Zacks Consensus Estimate of a loss of 8 cents. Eli Lilly had recorded earnings of $1.98 per share in the year-ago quarter. Revenues rose 37% to $9.5 billion and edged past the estimate of $8.9 billion. The pharma giant slashed its 2023 adjusted earnings per share guidance to $6.50-$6.70 from the previous range of $9.70-$9.90. It reiterated its revenue forecast in the range of $33.4 billion to $33.9 billion (read: Eli Lilly Beats on Q3 Earnings: ETFs to Buy).
ETF Angle
VanEck Vectors Pharmaceutical ETF (PPH - Free Report)
VanEck Vectors Pharmaceutical ETF follows the MVIS US Listed Pharmaceutical 25 Index and holds 26 stocks in its basket. The five firms collectively account for 28.7% share in the fund’s basket. The product has amassed $382.1 million in its asset base and trades in a good volume of about 113,000 shares a day. The expense ratio is 0.36%.
VanEck Vectors Pharmaceutical ETF carries a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
iShares U.S. Pharmaceuticals ETF (IHE - Free Report)
iShares U.S. Pharmaceuticals ETF provides exposure to 34 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 holdings in the basket, accounting for a combined 63.4% of the total assets, suggesting heavy concentration (see: all the Healthcare ETFs here).
iShares U.S. Pharmaceuticals ETF has $550.6 million in AUM and charges 40 bps in fees and expense. Volume is light as it exchanges about 15,000 shares a day. The fund carries a Zacks ETF Rank #2 (Buy), with a High risk outlook.
Invesco Dynamic Pharmaceuticals ETF (PJP - Free Report)
Invesco Dynamic Pharmaceuticals ETF 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 25 stocks in its basket, with the in-focus firms making up nearly 5-7% share each.
Invesco Dynamic Pharmaceuticals ETF has AUM of about $248.5 million and sees a lower volume of around 8,000 shares a day. The fund charges 57 bps in fees and expenses. The ETF has a Zacks ETF Rank #3 (Hold) with a High risk outlook.
SPDR S&P Pharmaceuticals ETF (XPH - Free Report)
SPDR S&P Pharmaceuticals ETF provides exposure to pharma companies by tracking the S&P Pharmaceuticals Select Industry Index. With AUM of $173.1 million, it trades in a moderate volume of around 35,000 shares a day and charges 35 bps in fees a year.
SPDR S&P Pharmaceuticals ETF holds 39 securities, with the in-focus firms making up for 23.6% share combined. It has a Zacks ETF Rank #3 with a High risk outlook.
First Trust Nasdaq Pharmaceuticals ETF (FTXH - Free Report)
First Trust Nasdaq Pharmaceuticals ETF tracks the Nasdaq US Smart Pharmaceuticals Index, holding 50 securities in its basket. The in-focus four firms account for a combined 32.2% of the assets. FTXH has a lower level of $19.6 million in AUM and an average daily volume of 6,000 shares.
First Trust Nasdaq Pharmaceuticals ETF charges 60 bps in annual fees and has a Zacks ETF Rank #3.