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Drug/Biotech Stock Earnings on Jan 29: PFE, AMGN, BIIB & AGN

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The earnings season for the quarter ending December has been unimpressive from the start except for a few companies. As expected, the momentum has decelerated compared to the first three quarter of 2018. Although more than 75% of the S&P 500 companies are yet to report, the weakening earnings trend is expected to continue.

Per the Earnings Trends report, Energy, Transportation, Construction, Finance, and the Retail sectors are expected to drive earnings growth in Q4. The Zacks Medical sector’s companies, comprising pharma biotech as well as medical device companies, which have reported so far and constituting almost a third of the sector’s market capitalization recorded 18.5% earnings growth and 8.5% sales growth year over year. Overall, fourth-quarter earnings and sales growth of this sector is expected to be 8.1% and 6.1%, respectively.

Although pharma bigwig Johnson & Johnson (JNJ - Free Report) reported better-than-expected results, it provided a softer outlook for 2019, which had an unfavorable effect on the sector. Among the other two big pharma companies, which reported earnings last week, Bristol-Myers (BMY - Free Report) beat earnings while AbbVie (ABBV - Free Report) missed the same. Both the companies missed the revenue expectations.

Several of the companies from the pharma/drug/biotech sectors have been facing rising generic/biosimilar competition for their key drugs and issues related to high drug prices. However, consistent innovation has brought several new drugs, which helped offset declining sales of many legacy drugs so far.

Let’s take a look at four pharma/biotech companies that are set to report fourth-quarter 2018 results on Jan 29.

Pfizer Inc. (PFE - Free Report)

Pfizer, which is scheduled to release earnings before the opening bell, delivered positive earnings surprise of 2.63% last quarter. The company’s earnings beat expectations in all the last four quarters with the average positive surprise being 6.35%.

For this quarter, Pfizer’s Earnings ESP of is 0.00% as the Most Accurate Estimate as well as the Zacks Consensus Estimate is pegged at 63 cents. The company currently holds a Zacks Rank #3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The company’s top line has been driven by strong growth in the sales of new drugs including Eliquis and Prevnar, which have successfully offset the loss due to declining sales of legacy drugs. These drugs along with Xeljanz are likely to contribute to the top line in the fourth quarter. Pfizer also has a strong biosimilar portfolio, which is set to contribute to sales growth. The company is also poised to get a boost from its expansion into emerging markets.

Ibrance U.S. sales declined in the third quarter due to increased rebates and rising competition. The sales trend for the drug in the fourth quarter remains unclear. Meanwhile, during the quarter Pfizer announced the merger of its consumer healthcare unit with Glaxo’s unit, creating the world’s largest consumer healthcare business. (Read more: Pfizer to Report Q4 Earnings: What's in the Cards?)

Pfizer Inc. Price and EPS Surprise

 

Pfizer Inc. Price and EPS Surprise | Pfizer Inc. Quote

Amgen Inc. (AMGN - Free Report)

Amgen is scheduled to announce results after the closing bell. The company beat estimates in three of the past four quarters while missing the same once. Amgen delivered a positive earnings surprise of 7.89% last quarter. The company delivered four-quarter average positive earnings surprise of 4.80%. The Zacks Consensus Estimate for earnings per share is pegged at $3.26.

The company has an Earnings ESP of +0.23% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Amgen’s revenues are likely to be driven by the encouraging performance of its newer drugs like Prolia, Kyprolis, Xgeva and Blincyto. Patient population for the leukemia drug, Blincyto, was expanded in the third quarter with its approval in Japan and U.S. label expansion into pediatric patients. These factors are likely to boost sales of the drug in the soon-to-be-reported quarter. Cholesterol drug, Repatha, is expected to see lower revenues on the back of a 60% price cut and payer restrictions. However, investors will remain focused on the performance of the newly approved migraine drug, Aimovig. (Read more: Amgen to Report Q4 Earnings: What's in the Cards?)

Amgen Inc. Price and EPS Surprise

 

Amgen Inc. Price and EPS Surprise | Amgen Inc. Quote

Biogen Inc. (BIIB - Free Report)

The company is expected to report before market open. Biogen beat estimates in three of the past four quarters while missing the same once, with a positive earnings surprise of 8.82% in the last reported quarter. The company delivered average positive earnings surprise of 4.66%.

The company has an Earnings ESP of -0.45% and a Zacks Rank #3. The Zacks Consensus Estimate for earnings per share is pegged at $6.72.

Biogen’s sales are mainly driven by its strong portfolio of multiple sclerosis (“MS”) drugs. Tecfidera sales improved in the third quarter especially driven by European and Japanese markets which is likely to continue in the fourth quarter. The new drug, Spinraza, approved for spinal muscular atrophy performed well on the back of strong uptake. The trend is expected to continue in the soon-to-be reported quarter. The company on its third-quarter earnings call had stated that year-over-year comparison in revenues will be difficult in the soon-to-be reported quarter due to favorable timing of contract manufacturing in the fourth quarter of 2017. (Read more: Biogen Q4 Earnings Coming Up: What's in the Cards?)

Biogen Inc. Price and EPS Surprise

 

Biogen Inc. Price and EPS Surprise | Biogen Inc. Quote

Allergan plc

The company is expected to report before market open. Allergan delivered an earnings surprise of 5.99% last quarter. Allergan’s performance has been encouraging with the company reporting positive surprise in all the last four quarters. The average earnings beat over the last four quarters is 6.66%.

The company has an Earnings ESP of +2.8% and a Zacks Rank #3.The Zacks Consensus Estimate is pegged at $4.15.

The company’s key products like Botox, Juvéderm collection of fillers, Vraylar, Alloderm, Linzess and Lo Loestrin are likely to support sales growth in the quarter. Demand for Botox has been strong despite facing rising competition with the recent launch of Amgen’s CGRP antibody, Aimovig. However, sales of several drugs like Namenda XR and Estrace cream are likely to be hurt by generic competition. Delay in the launch of a generic version of Restasis was a relief for the company in the fourth quarter. (Read more: Can Allergan Keep the Earnings Streak Alive in Q4?)

Allergan plc Price and EPS Surprise

 

Allergan plc Price and EPS Surprise | Allergan plc Quote

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