The fourth-quarter earnings season is in full swing for the drug and biotech sector. Several large drug and biotech stocks have already announced fourth-quarter results so far. A few industry players like Regeneron, AbbVie, Roche and Bristol-Myers beat on both earnings and sales, while others like Merck, Pfizer and GSK came out with mixed results.

The pharma/biotech industry falls under the broader Medical sector, comprising pharma/biotech and generic companies, and medical device companies.

Per the Earnings Trends report dated Jan 31, 21.7% of the Medical sector participants, constituting 41.1% of the sector’s market capitalization, have already posted earnings. While 76.9% of the companies beat on earnings, 92.3% surpassed on revenues. Earnings decreased 17.6% year over year, while revenues rose 5.8%.

Overall, fourth-quarter earnings of the Medical sector are expected to decline 19.5%, while sales are projected to increase 5%.

Let's see how things have shaped up for Amgen Inc. (AMGN Quick QuoteAMGN - Free Report) , Eli Lilly and Company (LLY Quick QuoteLLY - Free Report) , Gilead Sciences, Inc. (GILD Quick QuoteGILD - Free Report) and Exelixis, Inc. (EXEL Quick QuoteEXEL - Free Report) ahead of their fourth-quarter 2023 results. These companies will release earnings on Feb 6.

Amgen

Amgen’s performance has been impressive so far, with earnings beating estimates in each of the trailing four quarters. The company delivered a four-quarter earnings surprise of 6.04%, on average. In the last reported quarter, AMGN beat earnings expectations by 6.67%.

Our proven model does not conclusively predict an earnings beat for Amgen this time around. 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. But that is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Amgen has an Earnings ESP of -0.97% and has a Zacks Rank #3. The Zacks Consensus Estimate stands at $4.66 per share.

Our proven model previously predicted an earnings beat for Amgen in the to-be-reported quarter. However, estimates changed after that, and an earnings beat looks difficult now.

Amgen’s product sales in the fourth quarter are expected to have been driven by strong volume growth of products like Evenity, Repatha, Prolia and Blincyto, among others.

However, lower revenues from oncology biosimilars and legacy established products are expected to have hurt the top line.

In October 2023, Amgen completed the acquisition of Horizon Therapeutics for $27.8 billion. The acquisition of Horizon Therapeutics added several rare disease drugs like Tepezza, Krystexxa and Uplizna to Amgen’s portfolio. Amgen's fourth-quarter results will include sales of all these drugs.

Eli Lilly

This large drugmaker’s performance has been mixed, with the company beating estimates in three of the last four quarters while missing on the remaining occasion. Lilly delivered a four-quarter earnings surprise of 59.86%, on average. In the last reported quarter, LLY delivered an earnings surprise of 225.0%.

Lilly has an Earnings ESP of -4.11% and a Zacks Rank #3. The Zacks Consensus Estimate stands at $2.46 per share. You can see the complete list of today’s Zacks #1 Rank stocks here.

Higher demand and volume growth for Lilly’s key growth drugs (select products launched prior to 2022 like Cyramza, Emgality, Jardiance, Olumiant, Retevmo, Taltz, Trulicity, Tyvyt and Verzenio) are likely to have driven top-line growth in the to-be-reported quarter.

Also, focus will be on the sales number of Lilly’s FDA-approved tirzepatide medicines, which include diabetes drug Mounjaro and newly launched weight loss medicine, Zepbound.

Gilead Sciences

Gilead has a mixed track record, with earnings beating estimates in two of the last four quarters and missing in the remaining two, the average negative surprise being 0.24%. In the last reported quarter, the company delivered an earnings surprise of 19.90%.

Gilead has an Earnings ESP of -0.41% and currently carries a Zacks Rank #3. The Zacks Consensus Estimate stands at $1.76 per share.

Revenues in the fourth quarter are likely to have been boosted by growth in oncology and HIV franchise sales. However, a decline in COVID-19 product, Veklury’s (remdesivir) sales is likely to have hurt the top line to some extent.

A strong increase in cell therapy product sales is expected to boosted the top line in the to-be-reported quarter.

Exelixis

Exelixis has a mixed track record, with earnings beating estimates in two of the last four quarters and missing in the remaining two, the average beat being 2.33%. In the last reported quarter, the company reported a negative earnings surprise of 41.18%.

Exelixis has an Earnings ESP of -1.66% and a Zacks Rank #3. The Zacks Consensus Estimate stands at 32 cents per share.

Revenues in the fourth quarter are likely to have been driven by the strong sales of its lead drug, Cabometyx (cabozantinib), which is approved for treating several cancer indications.

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