The third-quarter earnings season for the drug and biotech sector will be in full swing this week with many large drugmakers like — Pfizer Inc. (PFE Quick QuotePFE - Free Report) , Eli Lilly and Company (LLY Quick QuoteLLY - Free Report) , AbbVie Inc. (ABBV Quick QuoteABBV - Free Report) , Merck & Co., Inc. (MRK Quick QuoteMRK - Free Report) and Bristol Myers Squibb (BMY Quick QuoteBMY - Free Report) — due to announce results. Pharma bigwig Johnson & Johnson reported strong third-quarter results, beating estimates for earnings and sales. Sanofi followed suit as it too reported solid third-quarter results, beating estimates for both earnings and sales.

Per the Zacks classification, 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, as of Oct. 23, 13.8% of the companies in the Medical sector — representing 32.6% of the sector’s market capitalization — reported quarterly earnings. Of these, 87.5% beat on earnings and also 87.5% beat on revenues. Earnings decreased 1.3% year over year, while revenues grew 7.3%. Overall, third-quarter earnings of the Medical sector are expected to increase 3.5% year over year, while revenues are likely to grow 8.8%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Let’s see how these companies are likely to have performed in the soon-to-be-reported quarter.

Pfizer

PFE’s performance has been solid, with the company exceeding earnings expectations in each of the trailing four quarters. It delivered a four-quarter earnings surprise of 69.82%, on average. In the last reported quarter, the company delivered an earnings surprise of 33.33%.

PFE has an Earnings ESP of +2.68% and a Zacks Rank #3 (Hold), indicating a likely earnings beat this time around. The Zacks Consensus Estimate for sales and earnings is pegged at $15.19 billion and 64 cents per share, respectively.

Per our proven model, companies with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 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.

Sales of Pfizer’s COVID products, Comirnaty and Paxlovid, are expected to have declined due to lower demand.

Though COVID revenues declined, Pfizer’s non-COVID operational revenues improved in the first half of 2024, driven by its key in-line products like Prevnar, Vyndaqel and Eliquis, new launches like Abrysvo, Velsipity, Penbraya, newly acquired products like Nurtec as well as those acquired from Seagen (December 2023). The trend is expected to have continued in the third quarter. The company is scheduled to report third-quarter results on Oct. 29, before the opening bell.

Eli Lilly

Eli Lilly’s performance has been solid, with earnings beating estimates in each of the trailing four quarters. The company delivered a four-quarter earnings surprise of 69.07%, on average. In the last reported quarter, LLY beat earnings expectations by 48.48%.

LLY has an Earnings ESP of 0.00% and a Zacks Rank #2. The Zacks Consensus Estimate for sales and earnings is pegged at $12.03 billion and $1.53 per share, respectively.

In the third quarter, top-line growth is expected to have been driven by exceptional demand growth for Lilly’s FDA-approved tirzepatide medicines, diabetes drug Mounjaro and weight loss medicine, Zepbound.

Higher demand and volume growth for Lilly’s key growth drugs like Emgality, Jardiance, Olumiant, Retevmo, Taltz and Verzenio are likely to have provided top-line support, driven by increased demand trends. The company is scheduled to report third-quarter results on Oct. 30, before the opening bell.

AbbVie

ABBV’s performance has been excellent, with earnings beating estimates in each of the trailing four quarters, delivering an average surprise of 2.39%. In the previously reported quarter, the company’s earnings beat estimates by 3.11%.

ABBV has an Earnings ESP of -0.23% and a Zacks Rank #3. The Zacks Consensus Estimate for sales and earnings is pegged at $14.28 billion and $2.92 per share, respectively.

AbbVie’s top-line growth is expected to have been driven by robust sales of key drugs Rinvoq, Skyrizi, Venclexta and Vraylar, coupled with significant contributions from newer drugs like Ubrelvy, Elahere, Epkinly and Qulipta. However, sales of Humira and Imbruvica are expected to have declined. The company is scheduled to report third-quarter results on Oct. 30, before the opening bell.

Merck

Merck’s performance has been solid, with the company exceeding earnings expectations in each of the trailing four quarters. The company delivered a four-quarter earnings surprise of 38.85%, on average. In the last reported quarter, MRK delivered an earnings surprise of 5.56%.

Merck has an Earnings ESP of -0.36% and a Zacks Rank #3. The Zacks Consensus Estimate for sales and earnings is pegged at $16.54 billion and $1.50 per share, respectively.

Merck’s top-line growth in the third quarter is likely to have been driven by the blockbuster cancer drug Keytruda, like in several previous quarters, which were aided by additional indications and patient demand. The company is scheduled to report third-quarter results on Oct. 31, before market open.

Bristol Myers

BMY’s performance has been excellent, with earnings beating estimates in each of the trailing four quarters, delivering an average surprise of 13.75%. In the previously reported quarter, the company’s earnings beat estimates by 26.22%.

The Zacks Consensus Estimate for sales and earnings is pegged at $11.3 billion and $1.50 per share, respectively. BMY currently has an Earnings ESP of -2.24% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

BMY’s total revenues in the third quarter are likely to have increased on the back of growth product franchise sales. The growth portfolio primarily comprises sales from immuno-oncology drugs like Opdivo, Orencia, Yervoy, Reblozyl, Opdualag, Abecma, Zeposia, Breyanzi, Camzyos, Sotyku, Krazati and others.

BMY is looking to turn around its business, banking on the strong uptake of new drugs. The recent spate of positive regulatory updates also bodes well for the stock, and we recommend it to investors. The company is scheduled to report third-quarter results on Oct. 31, before the opening bell.