A Look at Pharma ETFs After Q4 Earnings
The fourth-quarter results of the healthcare sector have been unimpressive, with earnings of companies that have reported so far down 17.7% despite 7% revenue growth. The earnings beat ratio of 79.4% and revenue beat ratio of 85.3% are assuring, though. Combining the actual results with the estimates for the still-to-report companies, the total earnings of the sector are expected to decline 18.2% despite revenue growth of 5.3%.
However, many industry bigwigs reported solid results, with some beating on earnings or revenues or both. As such, pharma ETFs have delivered mixed performances over the past month. iShares U.S. Pharmaceuticals ETF IHE, VanEck Vectors Pharmaceutical ETF PPH, and SPDR S&P Pharmaceuticals ETF XPH have gained 4.7%, 2.9% and 2.7%, respectively, while Invesco Pharmaceuticals ETF PJP and First Trust Nasdaq Pharmaceuticals ETF FTXH have lost 0.9% and 0.07%, respectively, in a month (see: all the Healthcare ETFs here).
Let’s delve deeper into the earnings of some of the bigwigs:
Earnings in Focus
Johnson and Johnson
Johnson & Johnson JNJ continued with its long streak of earnings beat. Earnings per share came in at $2.29, beating the Zacks Consensus Estimate of $2.27 and improving 11.7% from the year-ago quarter. Revenues grew 7.3% year over year to $21.4 billion and edged past the Zacks Consensus Estimate of $21.1 billion. For 2024, Johnson & Johnson expects revenues in the range of $87.8-$88.6 billion, indicating growth of 4.5-5.5% from the year-ago quarter. It expects earnings per share in the range of $10.55-$10.75, implying growth of 6.4-8.4% year over year.
Pfizer
Pfizer PFE topped estimates on the bottom line but missed on revenues. It reported adjusted earnings per share of 10 cents in contrast to the Zacks Consensus Estimate of a loss of 19 cents per share. In the year-ago quarter, the company had recorded earnings of $1.41 per share. Revenues declined 41% year over year to $14.25 billion and fell short of the consensus mark of $14.37 billion. The U.S. drug giant reaffirmed its revenue guidance of $58.5-$61.5 billion and adjusted earnings per share of $2.05-$2.25 for 2024.
Merck
Merck MRK also topped on earnings but lagged on revenues. It posted earnings per share of 3 cents in contrast to the Zacks Consensus Estimate of a loss of 9 cents. Earnings declined from the year-ago figure of $1.62. Revenues rose 6% year over year to $14.63 billion and fell shy of the consensus mark of $14.7 billion. Merck provided revenue and earnings for 2024. It expects revenues in the range of $62.7-$64.2 billion while earnings per share are expected in the range of $8.44-$8.59.
Bristol-Myers
Bristol-Myers BMY reported better-than-expected results. It posted earnings per share of $1.70, which outpaced the Zacks Consensus Estimate of $1.52 but declined from the year-ago earnings of $1.82. Revenues grew 1% year over year to $11.5 billion but edged past the Zacks Consensus Estimate of $11.1 billion. For 2024, Bristol-Myers expects revenues to increase in the low single digits while earnings per share are expected in the band of $7.10-$7.40.
Eli Lilly and Company
Eli Lilly and Company LLY topped estimates on both fronts. Earnings per share came in at $2.49, surpassing the Zacks Consensus Estimate of $2.46 and improving 19% from the year-ago earnings. Revenues rose 28% to $9.3 billion and edged past the estimate of $8.9 billion. The pharma giant provided 2024 outlook. It expects revenues in the range of $40.4-$41.6 billion and earnings per share in the range of $12.20-$12.70 (read: ETFs to Buy as Mounjaro Powers Eli Lilly's Q4 Earnings Beat).
ETF Angle
iShares U.S. Pharmaceuticals ETF (IHE)
iShares U.S. Pharmaceuticals ETF provides exposure to 32 U.S. companies that manufacture prescription or over-the-counter drugs or vaccines by tracking the Dow Jones U.S. Select Pharmaceuticals Index. The in-focus five firms are the top holdings in the basket, accounting for a combined 57.2% of the total assets, suggesting heavy concentration.
iShares U.S. Pharmaceuticals ETF has $665.9 million in AUM and charges 40 bps in fees and expenses. It carries a Zacks ETF Rank #2 (Buy) with a High risk outlook.
VanEck Vectors Pharmaceutical ETF (PPH)
VanEck Vectors Pharmaceutical ETF follows the MVIS US Listed Pharmaceutical 25 Index and holds 26 stocks in its basket. The five firms collectively account for 31.1% share in the fund’s basket. The product has amassed $529.6 million in its asset base and charges 36 bps in annual fees.
VanEck Vectors Pharmaceutical ETF carries a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: 5 ETF Zones Scaling New Highs at the Start of 2024).
SPDR S&P Pharmaceuticals ETF (XPH)
SPDR S&P Pharmaceuticals ETF provides exposure to pharma companies by tracking the S&P Pharmaceuticals Select Industry Index. With AUM of $217.1 million, it holds 35 securities, with the in-focus firms making up about 4% share each.
SPDR S&P Pharmaceuticals ETF charges 35 bps in fees a year and has a Zacks ETF Rank #3 with a High risk outlook.
Invesco Pharmaceuticals ETF (PJP)
Invesco Pharmaceuticals ETF offers exposure to companies that are principally engaged in the research, development, manufacture, sale, or distribution of pharmaceuticals and drugs of all types. It follows the Dynamic Pharmaceuticals Intellidex Index and holds 25 stocks in its basket, with the in-focus firms making up at least 5% share each.
Invesco Pharmaceuticals ETF has AUM of about $273.1 million and charges 57 bps in fees and expenses. The ETF has a Zacks ETF Rank #3 with a High risk outlook.
First Trust Nasdaq Pharmaceuticals ETF (FTXH)
First Trust Nasdaq Pharmaceuticals ETF tracks the Nasdaq US Smart Pharmaceuticals Index, holding 49 securities in its basket. The in-focus five firms account for a combined 30.9% of the assets. FTXH has AUM of $19.1 million.
First Trust Nasdaq Pharmaceuticals ETF charges 60 bps in annual fees and has a Zacks ETF Rank #3.
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Get it free >>Bristol Myers Squibb Company (BMY) : Free Stock Analysis Report
Johnson & Johnson (JNJ) : Free Stock Analysis Report
Pfizer Inc. (PFE) : Free Stock Analysis Report
Merck & Co., Inc. (MRK) : Free Stock Analysis Report
Eli Lilly and Company (LLY) : Free Stock Analysis Report
Invesco Pharmaceuticals ETF (PJP): ETF Research Reports
iShares U.S. Pharmaceuticals ETF (IHE): ETF Research Reports
SPDR S&P Pharmaceuticals ETF (XPH): ETF Research Reports
VanEck Pharmaceutical ETF (PPH): ETF Research Reports
First Trust NASDAQ Pharmaceuticals ETF (FTXH): ETF Research Reports
