Big Drug Stock Q1 Earnings Due on Apr 28: MRK, PFE and NVS

The first-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 Apr 22, 15.4% of the companies in the Medical sector, constituting nearly 33.3% of the sector’s market capitalization, reported earnings. While 87.5% of the companies that reported beat earnings estimates, 75% beat on sales. Earnings are up 3% year over year on 5.3% higher revenues. Overall, first-quarter earnings and sales growth for the Medical sector is expected to be 3.1% and 8.1%, respectively.

All the large drugmakers that have reported so far, J&J JNJ, Lilly LLY and Sanofi SNY beat estimates for both earnings and sales for the first quarter of 2020. All three companies benefitted from stockpiling of consumer healthcare products and basic medicines by consumers/patients amid coronavirus-led lockdown. However, despite the solid first-quarter results, Lilly kept its sales outlook intact while slightly raising its earnings guidance. Sanofi also maintained its earnings growth guidance as these companies expect the coronavirus-related benefits seen in the first quarter to reverse over the course of 2020, with the most significant impact in the second quarter. J&J lowered its financial guidance for 2020 to include the impact of the uncertainty surrounding the COVID-19 pandemic and costs related to investments that the company is making to combat the disease.

Let’s analyze three big pharma companies that are set to report first-quarter 2020 results on Apr 28, before market open.

Pfizer PFE

Pfizer’s performance has been mixed with the drug giant exceeding earnings expectations in three of the last four quarters while missing in one. The company has a four-quarter positive earnings surprise of 7.46%, on average.

Pfizer has an Earnings ESP of 0.00% and a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for earnings stands at 71 cents per share.

Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the odds of an earnings beat.  You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Higher sales of Pfizer’s key brands, Eliquis, Ibrance, Inlyta, Xtandi in the Biopharma segment, and higher biosimilar revenues are likely to have made up for lower sales in the Upjohn group. Meanwhile, investor focus is likely to be on the impact of the coronavirus outbreak on Pfizer’s performance when it reports first-quarter results.

Merck (MRK

Merck has an impressive track record so far.

The large drugmaker’s performance has been pretty impressive, with the company exceeding earnings expectations in each of the trailing four quarters. The company has a four-quarter positive earnings surprise of 12.70%, on average.

This #3 Ranked company has an Earnings ESP of 0.00%. The Zacks Consensus Estimate for earnings stands at $1.39 per share.

Merck’s new products like cancer drug Keytruda and Bridion injection are likely to have driven the top line in the to-be-reported quarter backed by strong demand. However, the top line is expected to reflect the impact of loss of exclusivity for some products including NuvaRing and competitive pressure on the diabetes franchise.

Novartis NVS

The company has a decent track record, beating earnings expectations thrice in the trailing four quarters and missing in the remaining one by 6.25%, on average. In the last reported quarter, the company missed expectations by 0.76%.

Novartis has an Earnings ESP of 0.00% and a Zacks Rank #3. The Zacks Consensus Estimate for earnings stands at $1.37 per share.

The Innovative Medicines division is likely to have maintained momentum in the first quarter on the back of strong performance by legacy drugs and incremental contributions from new drugs. Pharmaceuticals business unit sales are likely to have been driven by continued momentum in Entresto and Cosentyx drugs. However, Sandoz’s sales in the United States are expected to reflect price erosion.

Large Cap Pharmaceuticals Industry 5YR % Return

 

Large Cap Pharmaceuticals Industry 5YR % Return

 

Large Cap Pharmaceuticals Industry 5YR % Return

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Johnson & Johnson (JNJ) : Free Stock Analysis Report
 
Sanofi (SNY) : 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
 
Novartis AG (NVS) : Free Stock Analysis Report
 
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