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ABBV, MRK Q2 Earnings on Jul 27: Here are the Key Predictions
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The second-quarter reporting cycle is off to a positive start as evident from an accelerating revenue growth trend. Moreover, the proportion of positive surprises is higher than the past few quarters.
As of Jul 25, 147 S&P 500 members, accounting for 40.9% of the index’s total market capitalization, reported results, according to the latest Earnings Outlook.
Total earnings of these 147 index members are up 23.3% from the year-ago quarter on 9.1% improvement in revenues. The beat ratio is 83.7% for earnings and 74.8% for revenues.
Per the report, total earnings of S&P 500 companies in the second quarter are expected to grow 22.3% year over year on 8.4% higher revenues.
Please note that the broader Medical sector (includes drug, biotech as well as Medical Device companies) is expected to record year-over-year growth of 6.6% in revenues and 10.3% in earnings in the second quarter.
Two pharma bigwigs have reported this week so far. Both Lilly (LLY - Free Report) and Glaxo (GSK - Free Report) beat estimates for earnings and sales. Lilly raised its full-year guidance for both the metrics for the second time this year. Glaxo also upped its earnings growth expectations. It expects 7-10% earnings per share (EPS) growth at constant exchange rate (CER) in 2018, if no Advair generics are launched this year. Previously, Glaxo expected 4-7% EPS growth at CER.
Two other pharma giants — Merck & Co., Inc. (MRK - Free Report) and AbbVie, Inc. ABBV) — are set to report second-quarter results on Jul 27. Let's see how things are shaping up for their announcements.
Merck
Merck, which is scheduled to release earnings before the market opens, had delivered a positive earnings surprise of 6.06% last quarter. Merck’s performance has been pretty impressive, with the company exceeding earnings expectations in all the trailing four quarters. The average positive earnings surprise over the last four quarters is 8.55%
For this quarter, Merck has an Earnings ESP of -0.39% and a Zacks Rank #3 (Hold). The Zacks Consensus Estimate is pegged at $1.03 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Merck’s new products like Keytruda and Bridion are likely to drive second-quarter sales. However, headwinds remain in the form of genericization of key drugs and increasing competition. (Read more: Merck Q2 Earnings Coming Up: What's in the Cards?).
AbbVie
AbbVie is also scheduled to announce results before the opening bell. AbbVie’s earnings history is quite impressive with the pharmaceuticals company outpacing estimates in all the last four quarters with an average beat of 2.39%.
In the last reported quarter, the company delivered a positive earnings surprise of 3.89%.
The company has an Earnings ESP of 0.00% and a Zacks Rank #3. The Zacks Consensus Estimate is pegged at $1.98 per share.
Our previous article showed that AbbVie was likely to beat on earnings this quarter. However, estimates changed thereafter and we are not certain of a beat this earnings season
Sales of AbbVie’s flagship product, Humira are expected to remain strong despite the launch of drugs with new mechanisms of action and competition from indirect biosimilars. Cancer drug, Imbruvica and new HCV medicine, Mavyret should also be strong contributors to sales. However, operating expense can be high due to ongoing clinical studies and submission of regulatory applications. (Read more: Is a Beat in the Cards for AbbVie in Q2 Earnings?).
Here is a chart showing the two stock’s performance this year. While Merck’s shares have risen 14.6% this year so far, AbbVie’s stock has declined 3.7% against an increase of 0.3% decrease for the industry.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
ABBV, MRK Q2 Earnings on Jul 27: Here are the Key Predictions
The second-quarter reporting cycle is off to a positive start as evident from an accelerating revenue growth trend. Moreover, the proportion of positive surprises is higher than the past few quarters.
As of Jul 25, 147 S&P 500 members, accounting for 40.9% of the index’s total market capitalization, reported results, according to the latest Earnings Outlook.
Total earnings of these 147 index members are up 23.3% from the year-ago quarter on 9.1% improvement in revenues. The beat ratio is 83.7% for earnings and 74.8% for revenues.
Per the report, total earnings of S&P 500 companies in the second quarter are expected to grow 22.3% year over year on 8.4% higher revenues.
Please note that the broader Medical sector (includes drug, biotech as well as Medical Device companies) is expected to record year-over-year growth of 6.6% in revenues and 10.3% in earnings in the second quarter.
Two pharma bigwigs have reported this week so far. Both Lilly (LLY - Free Report) and Glaxo (GSK - Free Report) beat estimates for earnings and sales. Lilly raised its full-year guidance for both the metrics for the second time this year. Glaxo also upped its earnings growth expectations. It expects 7-10% earnings per share (EPS) growth at constant exchange rate (CER) in 2018, if no Advair generics are launched this year. Previously, Glaxo expected 4-7% EPS growth at CER.
Two other pharma giants — Merck & Co., Inc. (MRK - Free Report) and AbbVie, Inc. ABBV) — are set to report second-quarter results on Jul 27. Let's see how things are shaping up for their announcements.
Merck
Merck, which is scheduled to release earnings before the market opens, had delivered a positive earnings surprise of 6.06% last quarter. Merck’s performance has been pretty impressive, with the company exceeding earnings expectations in all the trailing four quarters. The average positive earnings surprise over the last four quarters is 8.55%
For this quarter, Merck has an Earnings ESP of -0.39% and a Zacks Rank #3 (Hold). The Zacks Consensus Estimate is pegged at $1.03 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Merck’s new products like Keytruda and Bridion are likely to drive second-quarter sales. However, headwinds remain in the form of genericization of key drugs and increasing competition. (Read more: Merck Q2 Earnings Coming Up: What's in the Cards?).
AbbVie
AbbVie is also scheduled to announce results before the opening bell. AbbVie’s earnings history is quite impressive with the pharmaceuticals company outpacing estimates in all the last four quarters with an average beat of 2.39%.
In the last reported quarter, the company delivered a positive earnings surprise of 3.89%.
The company has an Earnings ESP of 0.00% and a Zacks Rank #3. The Zacks Consensus Estimate is pegged at $1.98 per share.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Our previous article showed that AbbVie was likely to beat on earnings this quarter. However, estimates changed thereafter and we are not certain of a beat this earnings season
Sales of AbbVie’s flagship product, Humira are expected to remain strong despite the launch of drugs with new mechanisms of action and competition from indirect biosimilars. Cancer drug, Imbruvica and new HCV medicine, Mavyret should also be strong contributors to sales. However, operating expense can be high due to ongoing clinical studies and submission of regulatory applications. (Read more: Is a Beat in the Cards for AbbVie in Q2 Earnings?).
Here is a chart showing the two stock’s performance this year. While Merck’s shares have risen 14.6% this year so far, AbbVie’s stock has declined 3.7% against an increase of 0.3% decrease for the industry.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>