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5 Drug/Biotech Stocks Likely to Surpass on Earnings in Q3

Zacks Equity Research

The third-quarter earnings season for the pharma/biotech sector started last week, putting up an impressive performance so far in the reporting cycle. Good news is that most pharma bigwigs like Johnson & Johnson and Novartis beat on both sales and earnings as well as raised their guidance, combating generic plus biosimilar competition. Swiss pharma giant Roche too delivered a stellar performance on the back of new drugs, a trend that most likely benefited third-quarter sales for other major biggies.

Additionally, on the biotech front, Alexion and Biogen registered strong numbers, surpassing on both counts as their blockbuster drugs continue to drive growth. Moreover, the companies came up with positive pipeline updates.
While a decline in the legacy drug sales and pipeline setbacks were expected to leave an adverse impact on the margins and annual guidances, most companies lifted their annual outlook, buoying investor optimism on the stocks. New drug approvals and label expansions of blockbuster drugs are expected to have kept the momentum alive in the third quarter for most companies, enabling them to fight headwinds like pricing pressure and stiff rivalry.

How to Pick Probable Q3 Winners?

There are multiple drug/biotech companies poised to beat on third-quarter earnings. However, given the large number of drug/biotech entities, the task of selecting stocks with possibilities to surpass on expectations appears quite daunting.

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With the help of the Zacks Stock Screener, we have zeroed in on five drug/biotech stocks that carry a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP. This is a valuable tool for investors looking for stocks with the maximum potential to beat estimates. Our research shows that with this combination, chances of positive surprise are as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

5 Stocks Poised to Outperform

GlaxoSmithKline plc GSK has an Earnings ESP of +3.03% and a Zacks Rank #2. The Zacks Consensus Estimate for third-quarter 2019 earnings stands at $0.83. The company’s earnings topped estimates in three of the last four quarters, the average positive surprise being 12.74%. It is scheduled to release earnings on Oct 30. You can see the complete list of today’s Zacks #1 Rank stocks here.

Incyte Corporation INCY has an Earnings ESP of +1.15% and a Zacks Rank of 1. The Zacks Consensus Estimate for third-quarter 2019 earnings is pegged at $0.65. The company’s earnings trumped estimates in two of the last four quarters, the average beat being 25.01%. It is scheduled to release earnings on Oct 29.

Vertex Pharmaceuticals VRTX has an Earnings ESP of +3.07% and is Zacks #1 Ranked. The Zacks Consensus Estimate for third-quarter 2019 earnings stands at $1.13. The company’s earnings outpaced estimates in all the trailing four quarters, the average being 17.87%. The company is scheduled to release earnings on Oct 30.

Jazz Pharmaceuticals JAZZ has an Earnings ESP of +1.70% and a Zacks Rank of 2. The Zacks Consensus Estimate for third-quarter 2019 earnings stands at $3.59. The company’s earnings exceeded estimates in all the previous four quarters, the average being 14.81%. The company is scheduled to release earnings on Nov 5.

Zoetis, Inc. ZTS has an Earnings ESP of +2.58% and is Zacks #2 Ranked. The Zacks Consensus Estimate for third-quarter 2019 earnings stands at $0.89. The company’s earnings outshined estimates in all the last four quarters, the average being 7.89%. It is scheduled to release earnings on Nov 7.

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GlaxoSmithKline plc (GSK) : Free Stock Analysis Report
 
Vertex Pharmaceuticals Incorporated (VRTX) : Free Stock Analysis Report
 
Incyte Corporation (INCY) : Free Stock Analysis Report
 
Jazz Pharmaceuticals PLC (JAZZ) : Free Stock Analysis Report
 
Zoetis Inc. (ZTS) : Free Stock Analysis Report
 
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Zacks Investment Research