The third-quarter reporting cycle is witnessing revenue acceleration and a positive revisions trend for Q4.
Results from about half of the S&P 500 members are already out. As of Oct 27, 2017, total earnings for the 272 S&P 500 members are up 8.7% from the same period last year on 6.7% higher revenues, with 75.7% and 66.2% surpassing the earnings and revenue estimates, respectively.
According to the Earnings Preview, these 272 S&P 500 companies account for 64.2% of the index’s total market capitalization. Per the report, total earnings of the S&P 500 companies in Q3 are expected to grow 5.4% year over year on 5.5% higher revenues.
Please note that the broader Medical sector (includes drug, biotech as well as Medical Device companies) is expected to record year-over-year growth of 4.8% in revenues and 5.2% in earnings in Q3.
Among the biotech/pharma bigwigs, Merck & Co., Inc. MRK, Celgene Corporation CELG, AbbVie Inc., Bristol-Myers Squibb Company BMY and Gilead Sciences, Inc. GILD reported their third-quarter results last week. While Merck, Celgene and AbbVie outpaced the Zacks Consensus Estimates for earnings, they lagged the same for revenues. However, Bristol-Myers and Gilead surpassed expectations for both earnings and revenues.
Notably, Bristol-Myers and Gilead raised their earnings outlook for 2017 as well. While Merck raised its previously issued adjusted earnings guidance, it upped sales guidance marginally. Abbvie and Celgene also tightened their earnings guidance for 2017.
Here we have three biotech/pharma companies that are set to report third-quarter results on Oct 31.
Let's see how things are shaping up for this quarter.
Pfizer Inc. PFE
Pfizer, which is scheduled to release earnings before the market opens, delivered a positive earnings surprise of 3.08% in the last quarter. The company’s earnings performance has been mixed with the bottom line missing in two of the last four quarters while beating the same in the other two, bringing the average surprise to negative 0.39%.
For this quarter, Pfizer has an Earnings ESP of -0.11% and a Zacks Rank #3 (Hold). The Zacks Consensus Estimate is pegged at 65 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
New products like Xeljanz (rheumatoid arthritis) and Ibrance (breast cancer) as well as older products like Lyrica (neuropathic pain) and Eliquis (blood thinner) may contribute to the top line, meaningfully. Meanwhile, sales of blockbuster drug Enbrel will continue to decline in the quarter due to biosimilar competition. The lower sales trend in Prevnar/Prevenar 13 vaccines franchise is likely to continue as well. Sales of Viagra are expected to be affected by lower demand. (Read More: Is a Beat Likely for Pfizer This Earnings Season?)
Our previous article showed that Pfizer was likely to beat on earnings this quarter. However, estimates changed thereafter and we are not certain of a beat this earnings season.
Pfizer, Inc. Price and EPS Surprise
Pfizer, Inc. Price and EPS Surprise | Pfizer, Inc. Quote
Incyte Corporation INCY
Incyte, which is scheduled to release earnings before the market opens, witnessed a negative earnings surprise of 20% in the last quarter. The company’s earnings performance has been mixed so far, having delivered positive surprises in two of the last four quarters and missing in one and estimates unavailable in one. The average earnings surprise over the last four quarters is negative 3.94%.
The company has an Earnings ESP of +38.64% and a Zacks Rank #3, indicating a likely positive surprise. The Zacks Consensus Estimate is pegged at 6 cents per share. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The company’s key growth driver, Jakafi, has been performing well and we expect the trend to continue in the to-be-reported quarter as well.
Incyte Corporation Price and EPS Surprise
Incyte Corporation Price and EPS Surprise | Incyte Corporation Quote
Acorda Therapeutics, Inc. ACOR
Acorda, which is scheduled to release earnings before the market opens, witnessed a negative earnings surprise of 39.58% last quarter. The company’s earnings performance has been disappointing so far, with the company having incurred a negative surprise in each of the last four quarters. The average earnings surprise over the last four quarters is negative 106.91%.
The company has an Earnings ESP of +5.53% and a Zacks Rank #5 (Strong Sell), making the surprise prediction difficult. The Zacks Consensus Estimate is pegged at 66 cents per share.
As it is we caution against stocks with a Zacks Ranks #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
We expect investor focus on the refusal to file (RTF) relief for its late stage pipeline candidate, Inbrija, being developed for treatment of patients who are suffering from Parkinson’s disease.
Acorda Therapeutics, Inc. Price and EPS Surprise
Acorda Therapeutics, Inc. Price and EPS Surprise | Acorda Therapeutics, Inc. Quote
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