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Drug Stock Q4 Earnings to Watch on Feb 8: AGN, GSK & More

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We are in the thick of the Q4 reporting cycle, with quarterly numbers of several companies already on board. Growth is likely to be the highest in two years. Total earnings may even set a new quarterly record.

Approximately 275 S&P 500 members (representing 55% of the index’s total market capitalization) have reported quarterly results as of Feb 3. An impressive 68% of these companies managed to post an earnings beat, while 54.5% reported better-than-expected sales.

As per our Earnings Preview report, earnings for the S&P 500 companies are on track to improve 6.8% year over year on 3.9% higher revenues.

Looking forward, a large number of earnings reports are yet to be released and more than 470 companies, including 84 S&P 500 members, will reveal quarterly numbers this week. Hence, by the end of the week, approximately 71.8% of the total index should have reported results, offering a clearer earnings picture.

How have Drug Stocks Fared So Far?

A look at the Q4 performance of a few major pharma and biotech companies shows that the sector saw a mixed bag so far. Merck & Co., Inc. (MRK - Free Report) reported better-than-expected earnings while revenues missed the mark. (Read more: Merck Tops Q4 Earnings; Pharmaceutical Sales Down). Amgen Inc. (AMGN - Free Report) was able to meet expectations on both fronts. (Read more: Amgen Q4 Earnings Top; Repatha Positive in CV Study). Meanwhile, Celgene’s fourth-quarter results were disappointing, with the company missing on both earnings and revenues. (Read More: Celgene Misses on Earnings & Revenues, Keeps View).

Note that Medical is one of the sectors expected to record growth in the positive territory in Q4 with earnings expected to improve 3.8% on revenue growth of 5.7%.

As of Feb 3, 57.4% companies in the Medical sector reported results, putting up a blended beat of 45.2% (the percentage of companies that have beaten both earnings and revenue estimates). Overall the sector has registered 9.8% earnings growth on 5.2% higher revenues.

A number of pharma and biotech companies are yet to report Q4 results. Let’s take a sneak peek into four companies in the medical sector that are scheduled to report fourth-quarter 2016 and full-year results on Feb 8.

What Await these Drug Stocks?

Allergan plc is scheduled to report results before the opening bell on Feb 8. Although the company beat estimates in three of the four trailing quarters, it has delivered an average negative earnings surprise of 0.5%. However, the combination of Allergan’s Zacks Rank #3 (Hold) and +0.79% Earnings ESP makes us reasonably confident of an earnings beat this season.

The Zacks Consensus Estimate for the quarter is pegged at $3.79. Allergan’s revenues should continue to be driven by product launches, international growth and performance of key established products like Botox, Linzess and Restasis. (Read More: Allergan Q4 Earnings: What's in Store for the Stock?)

Our previous article showed that Allergan was unlikely to beat on earnings this quarter. However, estimates have changed since then and we are confident about an earnings beat now.

Allergan PLC. Price and EPS Surprise

 

Allergan PLC. Price and EPS Surprise | Allergan PLC. Quote

UK-based GlaxoSmithKline plc (GSK - Free Report) will be releasing results before the opening bell. The company has a decent track record having surpassed expectations thrice in the last four quarters with an average positive earnings surprise of 8.96.%. However, the company currently carries a Zacks Rank #2 (Buy), which when combined with its -5.36% Earnings ESP, makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for the quarter stands at 56 cents. Performance of the Pharmaceuticals segment should be driven by new HIV products Tivicay and Triumeq, while Vaccines will benefit from continued uptake of the meningitis vaccines. (Read More: GlaxoSmithKline Q4 Earnings: What's in the Cards?)

GlaxoSmithKline PLC Price and EPS Surprise

 

GlaxoSmithKline PLC Price and EPS Surprise | GlaxoSmithKline PLC Quote

Biopharma company, Alnylam Pharmaceuticals, Inc. (ALNY - Free Report) is scheduled to report results after the market closes. Alnylam has a mixed track record so far. The company has missed estimates in three of the last four quarters and beat the same only once, bringing the average positive surprise to 0.75%. Though the stock’s Zacks Rank #3 increases the predictive power of the ESP, it has an Earnings ESP of -1.68%, which makes surprise prediction difficult this quarter. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The Zacks Consensus Estimate for the quarter is pegged at $1.35. With no approved product in its portfolio, the Cambridge, MA-based company earns revenues primarily through collaborations. The alliance with Genzyme should continue driving the company’s top line in the coming quarters.

Large-cap pharma stock Sanofi (SNY - Free Report) is scheduled to release results before the market opens. This Paris, France-based company’s performance has been pretty impressive, with its earnings exceeding expectations in three of the last four quarters and meeting estimates once. The average positive earnings beat over the last four quarters is 5.85%. It currently carries a Zacks Rank #3 and has an Earnings ESP of 0.00%. Although the rank is favorable, the company’s ESP of 0.00% makes surprise prediction difficult.

The Zacks Consensus Estimate for the quarter is pegged at 67 cents. We expect investor focus to remain on the sales ramp-up of newly launched drugs Praluent, Toujeo and Dengvaxia. However, intense competitive pressure and the presence of biosimilar competition will continue to impact its Diabetes franchise.

Sanofi Price and EPS Surprise

 

Sanofi Price and EPS Surprise | Sanofi Quote

Stay tuned and check later on our full write-up on earnings releases of these stocks!

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