Biopharma Stocks Stall After Earnings, Lag Over 52 Weeks

Biopharma Stocks Stall After Earnings

  • The IBB holds up YTD and outperforms most biopharma stocks.
  • The legislative backdrop and the COVID-19 pandemic were blamed for mixed results.
  • Most analysts maintained outlooks, so look for downgrades and technicals.

It is hard to forecast with the current choppy setting in the biopharma sector, but assuming that the COVID-19 vaccinations are on track in the U.S., financial results should improve for most large-cap biopharmas.

Assuming that there is no further legislative action on pricing, most of these stocks are looking to be a hold because of their defensive nature and dividends. Notice how the IBB has outperformed.

We hold and trade AbbVie inc (ABBV), AstraZeneca (AZN), Bristol-Myers, (BMY), Gilead Sciences inc (GILD), Merck (MRK), Pfizer (PFE), Regeneron Pharma (REGN), and Roche Holdings (RHHBY). If you hold the IBB and XLV, your portfolio is covered for healthcare. IBB is at $154, with a 52-week high of $174.

Here is a quick summary in order of relative performance. Look for an uptrend for laggards in the coming weeks.

Biopharma Leaders

AbbVie, one of our top picks, is up over 4% YTD and 33% over the past 12 months; a beat and a raise. Total revenue is up 1% with, Q1 revenue at $12.9 billion. The company has a diversified portfolio in immunology, oncology, and neurology.

Bristol Myers Squibb missed on Q1 as cancer drugs lag. Total revenue lags at $11.1 billion, but guidance is retained. This company boasts product pipeline improvements in immuno-oncology, though it was cut to a Neutral rating at Morgan Stanley. Pfizer reports earnings on Tuesday, May 4.

Biopharma Laggards

  • Amgen (AMGN) revenues decreased 4% YoY to $5.9 billion. EPS is down to $2.83. Full year guidance was re-affirmed. There is a presence of price erosion in its core business.
  • Astra Zeneca stock bounced on Friday due to the Q1 revenue beat of $7.32 billion, up 15% YoY. Due to a merger with Alexion, Q1 revenue is at $1.636 billion. on track.
  • Biogen (BGEN) beat estimates, but sales were down YoY. Guidance on earnings were raised and sales were reiterated. The big upside bet will be for their Alzheimer’s drug, with an FDA decision on June 7.
  • Gilead has reported positive results for its Veklury-remdesivir COVID-19 drug. Otherwise, it is the same old story. Q1 revenue is at $6.4 billion, with EPS up $1.37 and illustrating a $2.6 billion cash flow.
  • Merck reported that the Q1 revenue of $12.2 billion was hit by the pandemic. Its growth outlook is to resume at 8-12%.
  • Vertex (VRTX) Product Revenues increased 14% to $1.72 billion, and GAAP EPS increased 23% to $888 million. The stock has been bottoming since Oct. 20, 2020, but several analysts have positive outlooks for the company.
  • Regeneron reports earnings on Thursday, May 6.

Disclosure: None.

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