EC Will These 5 Drug Stocks Be Big Winners This Earnings Season?

The third-quarter earnings season has kicked off with Alcoa reporting results earlier this week. With the Q3 earnings season expected to pick pace in the coming days, the market will be focused on seeing if the overall earnings picture will improve this season.

Q2 was the 5th quarter in a row of earnings declines for the S&P 500 index with earnings declining 2.8%. Current expectations for Q3 show an earnings decline of 2.9%. Half of the 16 Zacks sectors are expected to record negative earnings growth this quarter with Oils/Energy leading the group with expected negative earnings growth of 68.3%, followed by Transportation (-21.4%) and Autos (-18.5%).  

However, the overall expectation is that the worst is behind us with a turnaround in earnings growth expected from Q4.

Sectors that Should Perform Well in Q3

Meanwhile, Business Services (+7.1%), Construction (+6.3%) and other sectors like Retail, Finance, Utilities and Medical are expected to record earnings growth in Q3. In fact, Medical is one of the few sectors that has consistently recorded earnings growth over the last 4 quarters.

With the Medical sector expected to record earnings growth of 2.7% on revenue growth of 7.4% in Q3, it makes sense to select stocks from this sector that performed well in Q2 and are expected to do well in Q3. Investing in such stocks could prove beneficial for investors as an earnings beat usually leads to significant share price appreciation.

5 Drug Stocks to Keep an Eye on This Earnings Season

ARIAD Pharmaceuticals Inc. (ARIA - Analyst Report) : Cambridge, MA-based ARIAD is focused on the discovery, development and commercialization of precision therapies for patients with rare cancers. ARIAD’s sole marketed product is leukemia drug Iclusig and the company is currently seeking FDA approval for brigatinib for a specific type of lung cancer.

The Zacks Rank #1 company, which had posted an earnings surprise of +670.00% in the last quarter, has an Earnings ESP of +10.00% for Q3. Average surprise over the last 4 quarters is +153.54%. ARIAD is expected to report third quarter results on Nov 1.

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Disclosure: contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or ...

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