Several big pharma companies have reported their first-quarter results so far, demonstrating recovery in sales during the quarter. Sales of key drugs continued to recover from the adverse impacts of COVID-related disruptions. The performance of non-COVID vaccines was mixed. Renewed travel during the past few months boosted sales of several travel vaccines. However, COVID-19 vaccine prioritization during the first quarter hurt certain flu vaccine sales. Companies marketing COVID-19 therapies benefited the most during the first quarter with significant sales from their therapies.

Although a recovering economy fueled demand for newer drugs in the reported companies’ portfolios, driving their volumes, sales of several drugs were hurt due to lower realized prices. Legacy drugs in their portfolio continue to face stiff generic/biosimilar competition.

Among the big pharma companies that have reported so far, Bristol-Myers, Gilead, Eli Lilly, Sanofi, Merck and Glaxo beat on both earnings and sales. J&J and Novartis beat earnings estimates but missed the same for revenues.

Per the Zacks classification, the pharma/biotech industry comes under the broader

Medical

sector, which comprises pharma/biotech as well as medical device companies.

Per the

Earnings Outlook

, as of Apr 27, 21.1% of the companies in the Medical sector, constituting nearly 37.2% of the sector’s market capitalization, have reported earnings. While 83.3% beat earnings estimates, 75% beat the same for sales. Earnings increased 5.6% year over year on 14% higher revenues. Overall, first-quarter earnings for the Medical sector are expected to rise 10.5% on a 13.8% sales increase.

Zeroing in on the Winners

Here we have highlighted five pharma/biotech companies, which are expected to deliver an earnings surprise in their upcoming quarterly results. These include

Novo Nordisk


NVO

,

Vertex Pharmaceuticals


VRTX

,

Regeneron Pharmaceuticals, Inc.


REGN

,

Moderna


MRNA

and

Biogen


BIIB

.

Earnings ESP

is our proprietary methodology for determining the stocks that have the best chance to deliver an earnings surprise. Earnings ESP shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.

According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. The selection can be done with the help of the Zacks Stock Screener.

Our research shows that for stocks with this combination, the chance of an earnings surprise is as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our

Earnings ESP Filter

.

5 Pharma/Biotech Stocks That Match the Criteria

Novo Nordisk

is likely to have benefited from growth across all categories during the first quarter. However, the launch and promotion of new products like Rybelsus are likely to have increased costs, hurting margins. Persistent pricing pressure within Diabetes Care, especially in the United States, might also have negatively impacted sales.

The combination of Novo Nordisk’s Earnings ESP of +0.99% and a Zacks Rank #3 raises the possibility of an earnings surprise in the to-be-reported quarter.

The company is scheduled to

release

earnings for the first quarter of 2022 on May 4.

Vertex

’s revenues are likely to have been driven by the rapid uptake of the company’s newest cystic fibrosis (CF) medicine, Trikafta/Kaftrio. However, sales of other CF drugs in the company’s portfolio are likely to have been hurt by patients switching to Trikafta. Its cost control initiatives are likely to have benefited margin during the first quarter.

Vertex has an Earnings ESP of +0.87% and a Zacks Rank #2.

The company is scheduled to

release

earnings for the first quarter of 2022 on May 5.

Regeneron

’s top line is likely to have been driven by strong demand for Eylea and Dupixent during the first quarter. The revision of the emergency use authorization by the FDA in January for antibody cocktail REGEN-COV for COVID-19 patients is likely to have resulted in the loss of additional sales during the quarter. The FDA decided to limit the authorized use of Regeneron’s cocktail COVID-19 drug as this treatment option is highly unlikely to be effective against the Omicron variant in the United States.

The company has an Earnings ESP of +0.86% and a Zacks Rank #3.

The company is scheduled to

release

earnings for the first quarter of 2022 on May 4.

Moderna

’s revenues are likely to have been driven by the continued demand for its COVID-19 vaccine, Spikevax, during the first quarter. However, the company’s higher clinical activities related to the booster doses of its COVID-19 vaccine and other pipeline candidates are likely to have driven operating expenses higher.

Moderna has an Earnings ESP of +4.93% and a Zacks Rank of #3.

The company is scheduled to

release

earnings for the first quarter of 2022 on May 4.

Biogen

’s sales in the first quarter are likely to have been hurt by lower sales of Tecfidera and Spinraza. While Tecfidera is facing generic competition, Spinraza is facing competition from other approved-drugs for spinal muscular atrophy as well as pricing pressure in Europe. Sales of the new Alzheimer’s drug, Aduhelm, are likely to have been minimal as patient access is limited. (Read more:

Will Biogen Succeed in Beating Q1 Earnings Estimates?

)

Biogen is scheduled to

release

earnings for the first quarter of 2022 on May 3.

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