Drug/Biotech Stock Q1 Earnings Due on Apr 24: LLY, BIIB, AMGN

The first-quarter 2018 earnings season started on a solid note, showing signs of yet another reporting cycle emerging strong. Per the latest Earnings Preview, 87 S&P 500 members — accounting for 17.4% of the index — have already released financial figures as of Apr 20, 2018.

Total earnings for these index participants jumped 25% from the year-ago quarter, driven by 10.7% improved revenues. The beat ratio was 82.8% for the bottom line and 67.8% for the top line.

Further good news is that the ongoing earnings phase seems to have also begun encouragingly for the Drug/Biotech sector. Among the major large cap players, Johnson & Johnson JNJ kicked off the season strongly, beating the Zacks Consensus Estimate for both earnings as well as sales in first-quarter 2018. Another large cap player having reported earnings performance last week is Novartis NVS, which also surpassed both earnings and revenue expectations this quarter.

We remind investors that though the Drug/biotech sector faced severe volatility since the last couple of months due to broader market pressure, mainly driven by the U.S.-China trade war, the sector is still likely to improve as the year progresses.

We expect a surge in new product sales in sync with rising demand. This apart, a successful innovation and product line expansion, strong clinical study results, more frequent FDA approvals, a consistently sturdy performance of key products, growing demand for drugs, especially to address rare-to-treat diseases, an ageing populace and an increased healthcare expenditure are some of the factors that should keep the sector well in place.

Also, according to the Earnings Preview, the broader Medical sector (inclusive of drug, biotech as well as Medical Device companies) is likely to record 6.8% year-over-year growth in revenues and a 9.4% rise in earnings in the period under discussion.

Three pharma/biotech giants are scheduled to report earnings numbers on Apr 24. Let's see, how things are shaping up for the companies in the upcoming releases.

Eli Lilly and Company LLY

Eli Lilly and Company Price and EPS Surprise

Eli Lilly and Company Price and EPS Surprise | Eli Lilly and Company Quote

 

Lilly is slated to release first-quarter earnings before the market opens. The company delivered a positive surprise of 5.56% last quarter. Moreover, the company’s performance has been impressive in the recent past with its earnings surpassing expectations in all the trailing four quarters with an average positive surprise of 4.08%.

However, our proven model does not conclusively show that Lilly is likely to beat on earnings this quarter. Though the company’s favorable Zacks Rank #2 (Buy) increases the predictive power of ESP, its Earnings ESPof -0.48% leaves surprise prediction inconclusive as the company requires a positive ESP to be confident about a probable surprise. The Zacks Consensus Estimate for the quarterly earnings is pegged at $1.13 per share.

Lilly’s strong uptake of new products like Trulicity, Taltz, Basaglar, Cyramza, Jardiance and Lartruvo should compensate the sales decline of its established products, namely Zyprexa, Alimta, Cialis, Strattera and Effient. We expect this uptrend to find reflection in the results of the soon-to-be reported quarter. (Read More: Lilly (LLY) to Report Q1 Earnings: What's in the Cards?).

Biogen Inc. BIIB

Biogen Inc. Price and EPS Surprise

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

 

Biogen is also slated to release first-quarterearnings before the market opens. The company’s track record has also been impressive so far. It delivered a positive surprise in three of the trailing four quarters with an average beat of 6.91%. However, Biogen came up with a negative surprise of 3.31% in fourth-quarter 2017.

Moreover, our proven model does not conclusively show that Biogen is likely to beat on earnings this quarter. Though the company’s favorable Zacks Rank #3 (Hold) increases the predictive power of ESP, its Earnings ESP of -0.51% leaves surprise prediction inconclusive. The Zacks Consensus Estimate is pegged at $5.93 per share. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Sales of Biogen’s multiple sclerosis drugs improved. Patient growth across major European markets as well as growth in the strong emerging market drove international Tecfidera sales while inventory build in the quarter benefited U.S. sales. We expect this momentum to continue in the impending results of the soon-to-be reported quarter. (Read More: What's in Store for Biogen (BIIB) This Earnings Season?).

Amgen Inc. AMGN

Amgen Inc. Price and EPS Surprise

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

 

Amgen is scheduled to release first-quarter earnings after market close. The company delivered a negative surprise of 4.93% in the previous quarter. Amgen’s earnings performance has been quite robust with the metric beating expectations in three of the last four quarters while missing the same in the remaining one with an average beat of 2.93%.

Our proven model shows that Amgen is likely to beat on earnings this quarter. The combination of Amgen’s Zacks Rank of 3, which increases the predictive power of ESP and a positive Earnings ESP of +3.34% makes us confident about an earnings beat in the upcoming report. The consensus mark for the quarter to be reported is pegged at $3.23 per share.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Amgen’s latest products like Prolia, Kyprolis, Xgeva and Blincyto are likely to perform well backed by higher demand. This upside might make up for the weak sales on stiff competition of mature brands such as, Enbrel, Aranesp, Epogen, Neulasta and Neupogen in the to-be-reported quarter.(Read More: Amgen (AMGN) to Report Q1 Earnings: Is a Beat in the Cards?).

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Eli Lilly and Company (LLY) : Free Stock Analysis Report
 
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