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The Q3 earnings picture for the healthcare sector seems solid, with results from companies that have reported so far up 2.1% on 5.8% revenue growth. Both earnings and revenue beat ratios of 66.7% and 61.9%, respectively, also seem impressive. Combining the actual results with the estimates for the still-to-report companies, total earnings for the sector are expected to decline 3.8% on revenue growth of 4.5%.

Many industry bigwigs reported solid results with some beating on earnings or revenues or both. However, solid earnings failed to fully impress pharma ETFs over the past month. VanEck Vectors Pharmaceutical ETF (PPH - Free Report), iShares U.S. Pharmaceuticals ETF (IHE - Free Report), Invesco Dynamic Pharmaceuticals ETF (PJP - Free Report), SPDR S&P Pharmaceuticals ETF (XPH - Free Report) and First Trust Nasdaq Pharmaceuticals ETF (FTXH - Free Report) are modestly up to down in a month.

Let’s delve deeper into earnings of some of the bigwigs:

Earnings in Focus

Johnson and Johnson

The world's biggest healthcare products’ maker continued its long streak of earnings beat. Earnings per share came in at $2.55, beating the Zacks Consensus Estimate of $2.49 but deteriorating 1.9% from the year-ago quarter. Revenues grew 1.8% year over year to $23.8 billion and edged past the Zacks Consensus Estimate of $23.3 billion.

For 2022, Johnson & Johnson lifted its sales growth target to 6.7-7.2% from the previous guidance of 6.5-7.5%. However, the earnings per share guidance range has been revised down slightly from $10.00-$10.10 to $10.02-$10.07, representing year-over-year growth of 2.3-2.8%.

Pfizer

Pfizer topped on earnings and revenues. Earnings per share of $1.78 were well above the Zacks Consensus Estimate of $1.47. Revenues of $22.6 billion fell short of the consensus mark of $21.04 billion. On a year-over-year basis, earnings increased 40% and revenues fell 6%, respectively. The U.S. drug giant raised the lower end of the 2022 revenue guidance to $99.5-$102 billion from $98-102 billion but lowered the earnings guidance to $6.240$6.50 from $6.30-$6.45 per share.

Merck

Merck also reported better-than-expected results. Earnings per share of $1.85 outpaced the Zacks Consensus Estimate of $1.67 and increased 4% from the year-ago quarter. Revenues rose 14% year over year to $14.96 billion and came in above the consensus mark of $14.1 billion. For 2022, Merck lifted the revenue guidance to $58.5-$59 billion from $57.5-$58.5 billion and the earnings guidance to $7.32-$7.37 from $7.25-$7.35.

Bristol-Myers

Bristol-Myers reported earnings per share of $1.99, beating the Zacks Consensus Estimate of $1.83 and improving from the year-ago earnings of $1.93. Revenues declined 3% year over year to $11.2 billion and edged past the Zacks Consensus Estimate of $11 billion. The company maintained its earnings per share guidance range at $7.44-$7.74 for 2022 and expects revenues of around $46 billion.

Eli Lilly

Eli Lilly came up with robust results. Earnings of $1.98 per share outpaced the Zacks Consensus Estimate of $1.97 but were 12% higher than year-ago earnings. Revenues climbed 2% to $6.94 billion and surpassed the estimate of $6.91 billion. Eli Lilly lowered the 2022 revenue and earnings guidance. It expects revenues in the range of $28.5-$29 billion, up from $28.8-$29.3 billion, while earnings per share are expected between $7.70 and $7.85, down from $7.90 and $8.05.

ETF Angle

VanEck Vectors Pharmaceutical ETF (PPH)

VanEck Vectors Pharmaceutical ETF follows the MVIS US Listed Pharmaceutical 25 Index and holds 25 stocks in its basket. The five firms collectively account for around 31.5% share. The product has amassed $550.3 million in its asset base and trades in a good volume of about 168,000 shares a day. The expense ratio is 0.35%.

VanEck Vectors Pharmaceutical ETF carries a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

iShares U.S. Pharmaceuticals ETF (IHE)

iShares U.S. Pharmaceuticals ETF provides exposure to 41 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 59% of the total assets, suggesting heavy concentration.

iShares U.S. Pharmaceuticals ETF has $408.3 million in AUM and charges 39 bps in fees and expense. Volume is light as it exchanges about 8,000 shares a day. The fund carries a Zacks ETF Rank #3 and has a High risk outlook (read: Top-Ranked ETFs That Beat the Market in Q3).

Invesco Dynamic Pharmaceuticals ETF (PJP)

Invesco Dynamic 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 26 stocks in its basket, with the in-focus firms making up for nearly 5-6% share each.

Invesco Dynamic Pharmaceuticals ETF has AUM of about $318.3 million and sees a lower volume of around 14,000 shares a day. The fund charges 56 bps in fees and expenses. The ETF has a Zacks ETF Rank #3 with a High risk outlook.

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 $218.3 million, it trades in a moderate volume of around 42,000 shares a day and charges 35 bps in fees a year.

SPDR S&P Pharmaceuticals ETF holds 44 securities, with the in-focus firms making up for nearly 4% share each. It 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 29 securities in its basket. The in-focus five firms account for a combined 29.3% of the assets. FTXH has a lower level of $41.1 million in AUM and an average daily volume of 13,000 shares.

First Trust Nasdaq Pharmaceuticals ETF charges 60 bps in annual fees and has a Zacks ETF Rank #3.

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