5 Biotech Stocks Set to Outpace Q2 Earnings Estimates
It has been a mixed second-quarter earnings season for the drug/biotech stocks so far. Most companies beat estimates for earnings while missing the same for sales. However, AstraZeneca, Vertex Pharmaceuticals and AbbVie beat estimates on both counts. As expected, almost all companies witnessed a significant negative impact on their top line due to business disruption and reduced doctor visits in the United States amid COVID-19-related mobility restrictions & limitations. Meanwhile, coronavirus-related stockpiling benefits, which increased sales of several medicines in the first quarter, reversed in the second quarter and hurt sales. Lower selling, general and administrative costs due to COVID-19 related restrictions on travel and promotional activities gave a boost to earnings.
Per the Zacks classification, the pharma/biotech industry comes under the broader Medical sector, which comprises pharma/biotech as well as medical device companies.
Per the Earnings Trends report as of Aug 5, 79.6% of the companies in the Medical sector, constituting nearly 84.3% of the sector’s market capitalization, have already reported earnings. While 86% beat earnings estimates, 79.1% beat the same for sales. Earnings are up 4.4% year over year while revenues are up 4%. Overall, second-quarter earnings for the Medical sector are expected to rise 1.9% on 3.4% sales increase.
Zeroing in on Winners
Here we have highlighted five drug/biotech companies, which are expected to deliver an earnings surprise in their upcoming quarterly results.
Earnings ESP is our proprietary methodology for determining the stocks that have the best chance to deliver an earnings surprise. Earnings ESP shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. The selection can be done with the help of the Zacks Stock Screener.
Our research shows that for stocks with this combination, the chance of an earnings surprise is as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
5 Drug/Biotech Stocks That Match the Criteria
Arcturus Therapeutics Holdings ARCT
This San Diego, CA based biotech, focused on the development of RNA medicines, has an Earnings ESP of +2.83% and a Zacks Rank of 3. The Zacks Consensus Estimate for the second quarter is pegged at a loss of 53 cents per share. The company is scheduled to release results on Aug 10.
Arcturus Therapeutics missed estimates in three of the last four quarters while beating in one with the average negative surprise being 34.6%.
This San Francisco, CA based clinical stage biotech has an Earnings ESP of +4.49% and a Zacks Rank #2. The Zacks Consensus Estimate for the second quarter is pegged at a loss of 85 cents per share. 89bio delivered an earnings surprise of 17.39% in the last-reported quarter.
This Cambridge, MA based clinical-stage gene therapy company has as an Earnings ESP of +11.61% and a Zacks Rank of #3. The Zacks Consensus Estimate for the second quarter is pegged at a loss of 76 cents per share.
In the trailing four quarters, AVROBIO beat estimates in two quarters and missed in the other two with the average negative surprise being 5.81%.
AVROBIO, Inc. Price and EPS Surprise
Fulcrum Therapeutics, Inc. FULC
This Cambridge, MA based clinical-stage biotech has an Earnings ESP of +8.46% and is #3 Ranked. The Zacks Consensus Estimate for the second quarter stands at a loss of 80 cents per share. Fulcrum Therapeutics’ earnings missed expectations in three of the last four quarters while beating in one with the average negative surprise being 97.94%. The company is scheduled to release results on Aug 11.
Fulcrum Therapeutics, Inc. Price and EPS Surprise
Intercept Pharmaceuticals ICPT
This New York, NY-based biotech has an Earnings ESP of +10.76% and a Zacks Rank of 3. The Zacks Consensus Estimate for the second quarter is pegged at a loss of $2.88 per share. The company is scheduled to release results on Aug 10.
Intercept Pharmaceuticals, Inc. Price and EPS Surprise
In the trailing four quarters, Intercept beat estimates in two quarters and missed in the other two with the average negative surprise being 3.78%.
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Alcobra Ltd. (ARCT): Free Stock Analysis Report
Intercept Pharmaceuticals, Inc. (ICPT): Free Stock Analysis Report
AVROBIO, Inc. (AVRO): Free Stock Analysis Report
89BIO INC (ETNB): Free Stock Analysis Report
Fulcrum Therapeutics, Inc. (FULC): Free Stock Analysis Report
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