The second-quarter reporting cycle for the Medical sector has just started. The sector comprises pharma/biotech and medical device companies.
Per the Earnings Trends report of Jul 22, 13% of the companies in the Medical sector, constituting nearly 32.6% of the sector’s market capitalization, have already reported earnings. While 85.7% beat earnings estimates, 71.4% beat the same for sales. Earnings are up 0.9% year over year while revenues are down 1%. Overall, second-quarter earnings for the Medical sector are expected to be down 7.1% while sales are expected to be up 1.5%.
Among the large drugmakers, J&J, Biogen, Pfizer, Roche and Novartis have reported their results so far. Biogen and J&J beat second-quarter estimates for sales and earnings. J&J raised its 2020 outlook due to faster-than-expected recovery in the Medical Devices unit. While Biogen raised its earnings guidance for the year, it slightly lowered its sales expectations due to the impact of COVID-19. Pfizer beat estimates for earnings while missing the same for sales. It slightly raised its guidance for earnings and sales.
Let’s analyze five big drug/biotech companies that are set to report second-quarter 2020 results on Jul 30, before market open.
Eli Lilly LLY
Lilly’s performance has been pretty impressive, with earnings beat in each of the trailing four quarters. The company delivered a four-quarter earnings surprise of 8.24%, on average.
Lilly has an Earnings ESP of -1.90% and a Zacks Rank #3 (Hold). Per our proven model, stocks with the combination of a positive earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 have a good chance of delivering an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The Zacks Consensus Estimate for earnings stands at $1.58 per share.
Reduction in new prescription trends (as fewer patients visit a doctor) in the United States and Europe is expected to have hurt Lilly’s top line in the second quarter. The coronavirus-related stockpiling benefits, which increased sales of medicines like diabetes medicine, Trulicity and psoriasis medicine, Taltz in the first quarter are expected to have reversed in the second quarter.
Gilead Sciences GILD
The biotech’s performance has been mixed, with the company exceeding earnings expectations twice in the trailing four quarters while missing in the other two. The company has a four-quarter negative earnings surprise of 3.07%, on average.
This #3 Ranked company has an Earnings ESP of -9.75%. The Zacks Consensus Estimate for earnings stands at $1.51 per share.
Negative impacts of COVID-19 on its business in the second quarter with fewer patients accessing treatments for conditions like HIV and HCV are expected to reflect on Gilead’s top-line.
Vertex Pharmaceuticals Incorporated VRTX
The company’s earnings beat estimates in each of the trailing four quarters, the average being 27.7%.
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