5 Drug/Biotech Stocks Likely To Beat Q4 Earnings Estimates

The Medical sector has witnessed a fairly good run in this earnings cycle so far. Per the Earnings Trend report (published last week), 76.9% of the companies have reported earnings in this sector, which comprises pharma, biotech, and medical devices companies. Out of these, 77.5% beat on earnings and 72.5% beat on revenues resulting in a blended beat of 55%. Earnings are up 8.2% and sales grew 6.6% year over year.

Several big drug/biotech companies, including Eli Lilly, Novartis, GlaxoSmithKline, Biogen, Amgen and Gilead Sciences (GILD - Free Report), have reported fourth-quarter results so far and the performance has been mixed. Bellwether Johnson & Johnson (JNJ - Free Report) reported mixed results for the fourth quarter as it beat estimates for earnings but missed the same for sales, while the guidance for 2020 was pretty ho-hum. Eli Lilly reported strong fourth-quarter results, beating estimates on both counts. Swiss pharma Novartis reported disappointing results for the quarter as it missed both sales and earnings estimates. Nevertheless, the company provided encouraging guidance for 2020. Glaxo too missed on earnings and sales.

On the biotech front, Amgen and Alexion came out with strong numbers for the fourth quarter, beating both sales and earnings expectations. However, both companies issued a lackluster 2020 view. Vertex Pharmaceuticals Inc. also beat on both metrics and provided an encouraging outlook for the next quarter. Gilead reported mixed results, beating sales estimates on a strong HIV franchise. However, it missed on earnings and the outlook for 2020 was bleak as well.

Overall, the annual guidance provided by most companies is disappointing, thanks to the decline in the legacy drug sales and pipeline setbacks, which might have dragged down their margins. Nevertheless, quite a few small drug/biotech companies are yet to report results. Let us find out what is in store for these players.

How to Pick Probable Q4 Winners?

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