Investors Can't Miss These 3 Pharma Stocks
Things are definitely looking good for pharmaceutical companies
this year on the back of product launches, restructuring activities
and in-licensing deals. Several pharma companies have seen the
worst of the patent cliff while for others there is a bright light
at the end of the tunnel.
(LLY) are bracing themselves for patent losses of key products in
the forthcoming quarters. While Forest Labs' Namenda IR is likely
to start facing generic competition early next year, Eli Lilly's
Evista is slated to lose patent protection in a couple of months.
A common trend seen among big pharma companies struggling to come
to terms with genericization is to acquire smaller players in the
space. This trend is expected to continue among the companies yet
to emerge from the patent cliff and those looking to strengthen
their late-stage pipeline. Moreover, quite a few pharma giants have
been selling their non-core assets in the last few years and will
continue to do so in the coming years as well. For example,
(BMY) is selling off its global diabetes business to long-time
(AZN), to focus extensively on its existing portfolios comprising
oncology, neurosciences, immunology, cardiovascular and virology.
The pharma companies are thus taking proactive measures to beat the
generic wave and forge ahead. In fact, it is a good idea to zero in
on a handful of pharma stocks that are poised to beat earnings
estimates this quarter. An earnings beat should help these stocks
gain investor confidence and show price improvement.
The Way to Pick Right Stocks
Given the huge number of industry participants, pinpointing stocks
that have the potential to beat estimates could appear to be a
daunting task, but our proprietary methodology makes it fairly
simple. One way to narrow down the list of choices this earnings
season is by looking at stocks that have the combination of a
favorable Zacks Rank - Zacks Rank #1 (Strong Buy), #2 (Buy) or #3
(Hold) - and a positive Zacks
(Expected Surprise Prediction).
Earnings ESP is our proprietary methodology for identifying stocks
that have high chances of surprising in their next earnings
announcement. It shows the percentage difference between the Most
Accurate estimate and the Zacks Consensus Estimate.
Our research shows that for stocks with this combination, the
chance of a positive earnings surprise is as high as 70%.
Below are three pharma stocks we believe are best positioned to
stand out this earnings season.
), based in Paris, is engaged in developing and manufacturing
pharmaceutical products, primarily for sale in the prescription
drug market. The stock carries a Zacks Rank #3, with an Earnings
ESP of +2.27%. The Zacks Consensus Estimate for the fourth quarter
is 88 cents.
Although Sanofi could not deliver positive earnings surprises in
the last three quarters, it looks poised to beat expectations in
the fourth quarter. The company's diabetes franchise, like the last
few quarters, is expected to deliver strong sales. However,
genericization of several key drugs will keep affecting Sanofi's
Sanofi will be reporting fourth quarter 2013 earnings on Feb 6.
) is a Zacks Rank #3 (Hold) stock with an Earnings ESP of +2.41%.
The Zacks Consensus Estimate for the fourth quarter is 83 cents. In
the past 7 days, estimates (on an average) have inched up a penny.
AbbVie, based in North Chicago, Ill., is engaged in the discovery,
development, manufacturing and sale of proprietary pharmaceutical
products. The company has delivered positive earnings surprises in
the last three quarters and is expected to beat expectations in the
fourth quarter as well.
Key growth driver Humira should continue with its strong
performance in the fourth quarter. Other products like Synthroid,
Creon and Duodopa are expected to do well.
AbbVie will be reporting fourth quarter 2013 earnings on Jan 31.
), based in Irvine, Calif., is a Zacks Rank #2 (Buy) stock with an
Earnings ESP of +0.75%. The Zacks Consensus Estimate for the fourth
quarter is $1.34.
Allergan is a global multi-specialty pharmaceutical company engaged
in the development and commercialization of innovative products for
eye care, neurological, medical aesthetics, medical dermatology,
breast aesthetics, urological and other specialty markets. The
company has delivered positive earnings surprises in three of the
last four quarters with an average beat of 3.07%.
The company's specialty pharmaceuticals and eye-care
pharmaceuticals segments are expected to do well in the fourth
quarter. Allergan will be reporting fourth quarter 2013 earnings on
While a number of pharma companies are seeing improvements in their
financial results, there are others still facing tough challenges;
the companies are nevertheless looking for better strategies to
emerge as winners. A sneak peek at the space for some
outperformers, backed by a solid Zacks Rank and a positive Zacks
Earnings ESP, could be a great idea for investors to gain from this
ABBVIE INC (ABBV): Free Stock Analysis Report
ALLERGAN INC (AGN): Free Stock Analysis Report
SANOFI-AVENTIS (SNY): Free Stock Analysis
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