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Biotech ETFs in Focus on String of Q3 Earnings Beat

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Though the biotech sector is down in October, it shows promise for the long term due to a wave of mergers & acquisitions and a positive regulatory backdrop. Strong Q2 earnings results have also added to the strength as most of the biotech giants such as Amgen Inc. (AMGN - Free Report) , Gilead Sciences (GILD - Free Report) , Biogen Inc. (BIIB - Free Report) and Alexion Pharmaceuticals (ALXN - Free Report) have topped the estimates on both earnings and revenues  barring Alexion Pharmaceuticals, which missed on revenue estimates slightly (read: Health Care ETFs). 

Earnings in Focus

Amgen reported third-quarter earnings per share of $3.69, which beat the Zacks Consensus Estimate of $3.42 and improved from the year-ago earnings of $3.27. Revenues of $5.9 billion also came ahead of the estimated $5.8 billion and were up from $5.8 billion reported in the year-ago quarter.

Amgen raised its sales and earnings guidance for 2018. Better-than-expected second-quarter results and an optimistic outlook for the rest of the year led to the increase in earnings guidance. The company now expects revenues in the range of $23.2-23.5 billion compared with the previous prediction of $22.5-$23.2 billion. Adjusted earnings are now anticipated in the range of $14.00-$14.25 in 2018 compared with the previous projection $13.30-$14.00 (read: Amazon Slumps Nearly 14% in the Last 2 Days: ETFs in Focus).

Gilead Sciences beat earnings estimates by 14 cents and but came in 53 cents lower than the year-ago quarter. The revenue estimates were beaten by $160 million. Year-ago quarter revenues were reported at $6.51 billion.

Gilead expects net product sales of $20.8-$21.3 billion compared with the earlier estimate of $20-$21 billion (read: Gold Mining ETFs Slide on Dull Earnings).

Alexion Pharmaceuticals beat the Zacks Consensus Estimate on earnings by 27 cents and showed a year-over-year improvement of 45.3%. Revenues missed the estimate narrowly by $1 million and but saw a year-over-year improvement of 19.6%.

The company raised its earnings per share and revenue guidance for 2018. It expects earnings per share to be $7.45-$7.60, up from the previous forecast of $7.00-$7.15. Alexion projects revenues of $4.02-$4.05 billion, up from its previous expectation of $3.98-$4.01 billion

Biogen reported a positive surprise of 8.8% on earnings and 3.3% on revenues. Earnings improved year over year by 17.3% and revenues grew by 2.4%.

Biotech ETFs, iShares Nasdaq Biotechnology ETF(IBB - Free Report) , VanEck Vectors Biotech ETF(BBH - Free Report) andFirst Trust Amex Biotechnology Index(FBT - Free Report) have dipped in the last 4 trading days—period dotted with biotech releases by 0.8%, 2% and 1.7% respectively (as of Oct 30). Below, we have highlighted the four most-popular ETFs with high exposure to the above-mentioned companies:

 IBB

This fund tracks the NASDAQ biotechnology index. It has 191 holdings with 29.11% weight age to the mentioned four companies. It has an AUM of $8.6 billion and an expense ratio of 0.47%. Year-to-date loss is 3.6%.

BBH

The fund tracks the MVIS US Listed Biotech 25 Index. It has a pool of 25 stocks with 25.19% weight to the mentioned four companies. It has an AUM of $432.2 million and an expense ratio 0.35%. Year to date loss is 6.8%.  

FBT

It tracks the equal-weighted NYSE Arca Biotechnology Index. There are 30 holdings in the basket with FBT holding 12.9%. AUM is $3.18 billion, while expense ratio is 0.56%. Year-to-date return is 4.7%.  

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