Technology

Big Drug Stock Q2 Earnings on Jul 30: LLY, GILD, VRTX & More

The second-quarter reporting cycle for the Medical sector has just started. The sector comprises pharma/biotech and medical device companies.

Per the Earnings Trends report of Jul 22, 13% of the companies in the Medical sector, constituting nearly 32.6% of the sector’s market capitalization, have already reported earnings. While 85.7% beat earnings estimates, 71.4% beat the same for sales. Earnings are up 0.9% year over year while revenues are down 1%. Overall, second-quarter earnings for the Medical sector are expected to be down 7.1% while sales are expected to be up 1.5%.

Among the large drugmakers, J&J, Biogen, Pfizer, Roche and Novartis have reported their results so far. Biogen and J&J beat second-quarter estimates for sales and earnings. J&J raised its 2020 outlook due to faster-than-expected recovery in the Medical Devices unit. While Biogen raised its earnings guidance for the year, it slightly lowered its sales expectations due to the impact of COVID-19. Pfizer beat estimates for earnings while missing the same for sales. It slightly raised its guidance for earnings and sales.

Let’s analyze five big drug/biotech companies that are set to report second-quarter 2020 results on Jul 30, before market open.

Eli Lilly LLY

Lilly’s performance has been pretty impressive, with earnings beat in each of the trailing four quarters. The company delivered a four-quarter earnings surprise of 8.24%, on average.

Eli Lilly and Company Price and EPS Surprise

Eli Lilly and Company Price and EPS Surprise

 

 

 

 

 

 

 

 

Eli Lilly and Company price-eps-surprise | Eli Lilly and Company Quote

Lilly has an Earnings ESP of -1.90% and a Zacks Rank #3 (Hold). Per our proven model, stocks with the combination of a positive earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 have a good chance of delivering an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The Zacks Consensus Estimate for earnings stands at $1.58 per share.

Reduction in new prescription trends (as fewer patients visit a doctor) in the United States and Europe is expected to have hurt Lilly’s top line in the second quarter. The coronavirus-related stockpiling benefits, which increased sales of medicines like diabetes medicine, Trulicity and psoriasis medicine, Taltz in the first quarter are expected to have reversed in the second quarter.

Gilead Sciences GILD

The biotech’s performance has been mixed, with the company exceeding earnings expectations twice in the trailing four quarters while missing in the other two. The company has a four-quarter negative earnings surprise of 3.07%, on average.

Gilead Sciences, Inc. Price and EPS Surprise

Gilead Sciences, Inc. Price and EPS Surprise

Gilead Sciences, Inc. price-eps-surprise | Gilead Sciences, Inc. Quote

This #3 Ranked company has an Earnings ESP of -9.75%. The Zacks Consensus Estimate for earnings stands at $1.51 per share.

Negative impacts of COVID-19 on its business in the second quarter with fewer patients  accessing treatments for conditions like HIV and HCV are expected to reflect on Gilead’s top-line.

Vertex Pharmaceuticals Incorporated VRTX

The company’s earnings beat estimates in each of the trailing four quarters, the average being 27.7%.

Vertex Pharmaceuticals Incorporated Price and EPS Surprise

Vertex Pharmaceuticals Incorporated Price and EPS Surprise

Vertex Pharmaceuticals Incorporated price-eps-surprise | Vertex Pharmaceuticals Incorporated Quote

Vertex has an Earnings ESP of +5.58% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here

Our previous article showed that Vertex did not have the favorable combination to beat on earnings in the soon-to-be-reported quarter. However, estimates have changed thereafter and we are more certain of a beat now.

The Zacks Consensus Estimate for earnings stands at $2.13 per share.

Vertex’s sales in the quarter are likely to have been driven by rapid uptake of the company’s newly-launched CF medicine Trikafta. Meanwhile, higher international revenues owing to a strong patient uptake of Orkambi and Symkevi following the completion of reimbursement arrangements in key ex-U.S. countries like England and France in 2019 might have boosted the company’s sales in the second quarter.

Alexion Pharmaceuticals ALXN

The company has an excellent track record, delivering an earnings beat in the trailing four quarters by 11.65%, on average.

Alexion Pharmaceuticals, Inc. Price and EPS Surprise

Alexion Pharmaceuticals, Inc. Price and EPS Surprise

Alexion Pharmaceuticals, Inc. price-eps-surprise | Alexion Pharmaceuticals, Inc. Quote

 

Alexion has an Earnings ESP of +0.40% and a Zacks Rank #3, indicating a likely earnings beat. The Zacks Consensus Estimate for earnings stands at $2.55 per share.

Our previous article showed that Alexion did not have the favorable combination to beat on earnings in the soon-to-be-reported quarter. However, estimates have changed thereafter and a beat looks likely now.

Sales in the second quarter are likely to have been driven by Alexion’s key growth driver, Soliris supported by solid demand for its approved indications. Investors will be keen to know the performance of Alexion’s long-acting C5 complement inhibitor, Ultomiris. 

AstraZeneca plc AZN

The company’s earnings beat estimates in three of the past four quarters and missed the same once, with the average surprise being 6.11%.

AstraZeneca PLC Price and EPS Surprise

AstraZeneca PLC Price and EPS Surprise

AstraZeneca PLC price-eps-surprise | AstraZeneca PLC Quote

AstraZeneca has an Earnings ESP of -1.73% and a Zacks Rank #3. The Zacks Consensus Estimate for earnings stands at 43 cents.

Sales of newer medicines, mainly cancer drugs Lynparza, Tagrisso and Imfinzi are expected to have benefited the company’s top line in the second quarter by offsetting lower sales of many other legacy medicines.

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