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Where Are Biotech ETFs Headed After Q4 Earnings?

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After facing difficulties last year following the rise in interest rates and a slowdown in merger activities, biotech companies are seeing a turnaround driven by attractive valuations and AI-led advances in medicine.

The S&P Biotechnology Select Industry Index has gained 4.10% over the past year and 1.30% month to date.

According to Financial Times, biotech firms are swiftly tapping into U.S. equity markets. Drug developers raised $6.2 billion in the markets in January, marking the highest amount raised since February 2021. This turnaround follows a two-year deal drought, prompting cost-saving measures and business closures.

Let’s take a look at some big biotechnological earnings releases to see if these will impact ETFs exposed to the space.

Earnings in Focus

Amgen

On Feb 6, Amgen (AMGN - Free Report) reported fourth-quarter 2023 adjusted earnings of $4.71 per share, up 15% from the year-ago quarter on higher revenues, which were partially offset by higher operating costs and higher interest expenses. The bottom line beat the Zacks Consensus Estimate of $4.66.

Total revenues of $8.2 billion beat the Zacks Consensus Estimate of $8.16 billion. Total revenues rose 20% from the year-ago quarter, driven by higher product sales. Other revenues came in at $363 million in the quarter, up 26.5% year over year.

However, total sales of established products, which include Epogen, Aranesp, Parsabiv and Neulasta, decreased 10% year over year in the quarter.

For 2024, the company expects to record revenues of $32.4-$33.8 billion. The Zacks Consensus Estimate is pegged at $32.4 billion. AMGN projected adjusted earnings of $18.90-$20.30, while the Zacks Consensus Estimate pegged at $19.81 per share.

Gilead Sciences

On Feb 6, Gilead Sciences, Inc. (GILD - Free Report) reported mixed results in the fourth quarter as earnings missed expectations while sales surpassed the same. GILD’s fourth-quarter adjusted earnings of $1.72 per share missed the Zacks Consensus Estimate of $1.76 but increased from $1.67 in the year-ago quarter due to lower total costs and expenses.

Total revenues of $7.1 billion beat the Zacks Consensus Estimate of $7 billion on better-than-expected Veklury (remdesivir) sales due to an uptick in hospitalizations at the end of 2023. Revenues decreased 4% due to lower Veklury and HIV sales than the year-ago quarter's level. Total product sales decreased 4% to $7.1 billion in the quarter under review.

Product sales are projected between $27.1 billion and $27.5 billion. Total Veklury sales are estimated at around $1.3 billion.  Adjusted earnings per share of $6.85-$7.25 are anticipated.

Biogen

On Feb 13, Biogen (BIIB - Free Report) reported fourth-quarter 2023 adjusted earnings per share of $2.95, which missed the Zacks Consensus Estimate of $3.16. Earnings declined 27% year over year.

Total revenues came in at $2.39 billion, down 6% on a reported basis from the year-ago quarter due to lower sales of all key drugs, multiple sclerosis (MS) drugs like Tecfidera and Tysabri as well as spinal muscular atrophy drug, Spinraza. Sales missed the Zacks Consensus Estimate of $2.45 billion. Product sales in the quarter were $1.83 billion, down 4% year over year.

Total revenues are expected to decline in 2024 from the 2023 level. Adjusted earnings of $15.00-$16.00 are expected, implying growth of approximately 5% at the midpoint. The Zacks Consensus Estimate is pegged at $14.97 per share.

ETFs in Focus

Below, we highlight a few Biotech ETFs for investors to monitor.

iShares Biotechnology ETF (IBB - Free Report)

iShares Biotechnology ETF seeks to track the performance of the ICE Biotechnology Index with a basket of 226 securities. The fund has an asset base of $7.44 billion and charges an annual fee of 0.45%

iShares Biotechnology ETF has gained 18.30% over the past three months but has fallen 1.05% over the past month.

SPDR S&P Biotech ETF (XBI - Free Report)

SPDR S&P Biotech ETF seeks to track the performance of the S&P Biotechnology Select Industry Index with a basket of 121 securities. The fund has amassed an asset base of $6.96 billion and charges an annual fee of 0.35%.

SPDR S&P Biotech ETF has gained 32.15% over the past three months but has fallen 1.95% over the past month.

VanEck Biotech ETF (BBH - Free Report)

VanEck Biotech ETF seeks to track the performance of the MVIS US Listed Biotech 25 Index with a basket of 24 securities. The fund has amassed an asset base of $457 million and charges an annual fee of 0.35%.

VanEck Biotech ETF has gained 15.24% over the past three months and 0.16% over the past month.

Invesco Biotechnology & Genome ETF (PBE - Free Report)

Invesco Biotechnology & Genome ETF seeks to track the performance of the Dynamic Biotech & Genome Intellidex Index with a basket of 31 securities. The fund has gathered an asset base of $255 million and charges an annual fee of 0.58%.

Invesco Biotechnology & Genome ETF has gained 19.79% over the past three months but has lost 2.52% over the past month.

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