Q2 earnings season kicked off earlier this month with about 32 S&P 500 members reporting results so far. While total earnings for these 32 index members are down 2.5% from the year-ago quarter, revenues grew 0.5% year-over year, with 65.6% beating earnings estimates and 43.8% coming ahead of top-line expectations.
However, the Medical sector, which was among the best performing sectors in Q1, is yet to open its scorecard. A look at our Earnings Trend report will show that the Medical sector is again expected to be among the better-performing sectors in Q2 with earnings expected to grow 0.5% on revenue growth of 7.7%.
With three medical stocks including industry bellwether Johnson & Johnson (JNJ - Free Report) scheduled to report results on Jul 19, let’s see how these stocks are placed ahead of the scheduled announcements.
Johnson & Johnson, which had delivered an earnings beat in the last reported quarter, has a diversified business model with a presence in three segments: Consumer, Pharmaceutical and Medical Devices.
The New Brunswick, NJ-based company’s Pharma segment is once again expected to drive results this quarter with drugs like Stelara, Imbruvica, Xarelto, Simponi and Invega Sustenna expected to perform well. Soft global market conditions and pricing challenges will continue impacting the performance of the Medical Devices business while the consumer business is slowly recovering from the impact of the manufacturing issues that had affected this segment.
Currency and devaluation in Venezuela will remain headwinds while the company’s share buybacks will boost the bottom line. J&J has an Earnings ESP of +0.60% and a Zacks Rank #2 (Buy), which makes it likely the company will beat estimates in Q2 as well. (Read more: J&J May Beat Q2 Earnings: Will the Stock Gain?).
Basel, Switzerland-based large cap pharma company, Novartis AG (NVS - Free Report) , also has the right combination of a favorable Zacks Rank - Zacks Rank #3 (Hold) and positive Earnings ESP (+0.85%) which makes it likely that the company will beat estimates in Q2.
Sandoz, Novartis’ generic arm, continues to strengthen its biosimilars portfolio and pipeline. Investors will be interested in knowing about the company’s plans for its biosimilar version of Amgen’s (AMGN - Free Report) Enbrel which got favorable backing from an FDA advisory panel last week. Entresto and Cosentyx’s performance will also remain in focus (Read more: Novartis Likely to Beat Q2 Earnings: Stock to Gain?). Challenges include weakness in the Alcon segment and the presence of Gleevec generics.
Lansing, MI-based Neogen Corp. (NEOG - Free Report) will be reporting fourth quarter and fiscal 2016 earnings on Jul 19. The company is focused on the development, manufacture and marketing of a diverse line of products dedicated to food and animal safety. However, its track record has been disappointing, with the company reporting lower-than-expected earnings in three of the last four quarters. Neogen currently has a Zacks Rank #3 (Hold) and an Earnings ESP of 0.00%, which makes surprise prediction difficult.
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