Are Biotech ETFs In Trouble As Coronavirus Dims Guidance?

The coronavirus has infected more than three million people across the globe. The death toll has surpassed 269,000 worldwide, according to Johns Hopkins University. In such a scenario, the desperation for a vaccine or treatment is rising by the hour. The race to introduce vaccine and treatment for coronavirus is opening up opportunities, making the biotech sector a prospective space for investments. From positive news related to Gilead Sciences’ remdesivir to progress in development of cell therapies for the treatment of COVID-19, these developments have kept the sector surging.

Although the coronavirus outbreak seems to be opening up opportunities for biotech companies, it is dampening their guidance as well. Despite delivering impressive results, most of the following biotech companies have been seeing declining share prices since the earnings releases largely due to coronavirus-hit outlooks. Let’s take a look at some big biotechnological earnings releases to see if these will impact ETFs exposed to the space.

Earnings in Focus

On Apr 30, Amgen AMGN reported first-quarter 2020 earnings of $4.17 per share, which surpassed the Zacks Consensus Estimate of $3.70. Earnings increased 17% year over year, largely on the back of higher revenues and share count. Total revenues of $6.16 billion in the quarter outpaced the Zacks Consensus Estimate of $6 billion. However, total revenues increased 11% year over year.

Amgen re-affirmed its financial guidance for 2020. It expects revenues in the range of $25.0-$25.6 billion, which indicates an increase from 2019 levels. Adjusted earnings per share are anticipated in the range of $14.85-$15.60. However, shares have been down 2.5% since the earnings release (as of May 7, 2020).

On Apr 30, Gilead Sciences GILD reported impressive results for the first quarter, as both earnings and sales beat estimates. The company reported earnings of $1.68 per share in the March-end quarter, increasing a cent from the year-ago quarter’s reported figure and beating the Zacks Consensus Estimate of $1.58. Total revenues of $5.55 billion outpaced the Zacks Consensus Estimate of $5.41 billion and rose 5.1% year over year.

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