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What's in the Cards for Merck KGaA (MKGAF) in Q2 Earnings?

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Merck KGaA is scheduled to report second-quarter 2017 earnings results on Aug 3.

Merck KGaA’s share price has increased 10% year to date, while the industry gained 6.3%.

The company reports results under three business sectors – Healthcare, Life Science and Performance Materials.

Strong performance at Life Science, which was the catalyst behind sales growth in the last few quarters, is anticipated to continue in the soon-to-be-reported quarter. However, sales at the Healthcare division were disappointing last quarter with only cancer drug, Erbitux registering sales growth. The Mar 2017 recommendation from National Institute for Health and Care Excellence for Erbitux’s use in combination with either Folfiri or Folfox as a first-line treatment for patients with RAS wild-type metastatic colorectal cancer in the UK is expected to boost sales.

However, competitive pressure and price reduction are expected to hurt sales of infertility drug, Gonal-f. Meanwhile, a year-over-year weakening of euro against dollar is expected to positively impact total sales for the company.

In Mar 2017, the company received approval for Bavencio for the treatment of metastatic Merkel cell carcinoma (mMCC) followed by approval for advanced bladder cancer in May 2017 in the U.S.. The drug may bring in some sales this quarter. Moreover, the company is developing the drug in partnership with Pfizer Inc. (PFE - Free Report) for several cancer indications.

Subsequent to the quarter, the company received a positive opinion from Committee for Medicinal Products for Human Use (CHMP) for Bavencio in July as a monotherapy in adult mMCC patients. We expect management to shed light on commercialization plans for Bavencio at the earnings call.

Merck KGaA, in Apr 2017 announced an agreement to divest its biosimilars business to Fresenius, as part of the company’s strategy to focus on its pipeline of innovative medicines. The deal is expected to close in the second half of 2017.

Stocks that Warrant a Look

Here are a couple of health care stocks that you may want to consider, as our model shows that they have the right combination of elements – a positive Zacks Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) – to post an earnings beat this quarter. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zoetis Inc. (ZTS - Free Report) has an Earnings ESP of +1.89% and a Zacks Rank #3. The company is scheduled to release results on Aug 8. You can see the complete list of today’s Zacks #1 Rank stocks here.

Clovis Oncology, Inc. (CLVS - Free Report) has an Earnings ESP of +6.30% and a Zacks Rank #3. The company is scheduled to release results on Aug 2.

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