While almost all big drugmakers have reported their results, several smaller drug and biotech companies are yet to report this earnings season. As far as the large drug/biotech companies are concerned, the fourth-quarter earnings season has been a mixed bag. While Lilly, Gilead, AstraZeneca, Regeneron and J&J beat estimates for both earnings and sales, Merck, Sanofi and Novartis missed on both counts. Others like Pfizer, Biogen and Glaxo missed estimates for earnings while beating the same for sales.
Sales of some drugs/vaccines/products were hurt by the coronavirus pandemic, mostly in the first half of 2020 with some recovery trends observed in the second half of the year.
Per the Zacks classification, the pharma/biotech industry comes under the broader
Medical
sector, which comprises pharma/biotech as well as medical device companies.
Per the
Earnings Trends
report as of Feb 17, 85.5% of the companies in the
Medical
sector, constituting nearly 93.5% of the sector’s market capitalization, reported earnings. While 78.7% beat earnings estimates, 85.1% beat the same for sales. Earnings increased 16.8% year over year on 13.3% higher revenues. Overall, fourth-quarter earnings for the Medical sector are expected to rise 14.6% on 12.9% sales increase.
Zeroing in on Winners
Here we have highlighted four drug/biotech companies, which are expected to deliver an earnings surprise in their upcoming quarterly results.
Earnings ESP
is our proprietary methodology for determining the stocks that have the best chance to deliver an earnings surprise. Earnings ESP shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. The selection can be done with the help of the
Zacks Stock Screener
.
Our research shows that for stocks with this combination, the chance of an earnings surprise is as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our
Earnings ESP Filter
.
4 Drug/Biotech Stocks That Match the Criteria
Moderna
MRNA
This Cambridge, MA-based biotech, which is one of the first companies to launch a COVID-19 vaccine, has an Earnings ESP of +0.57% and a Zacks Rank of 2. You can see
the complete list of today’s Zacks #1 Rank stocks here
The Zacks Consensus Estimate for the fourth quarter is pegged at a loss of 25 cents per share. The company is scheduled to release results on Feb 25. The company’s earnings beat estimates in three of the last four quarters and missed the same once, delivering an average negative surprise of 0.99%.
Investor focus is likely to be on the
initial sales numbers
of Modena’s coronavirus vaccine on the fourth-quarter earrings call.
Lexicon Pharmaceuticals
LXRX
This Texas-based biotech has an Earnings ESP of +3.57% and a Zacks Rank #2. The Zacks Consensus Estimate for the fourth quarter is pegged at a loss of 28 cents per share. Lexicon beat estimates in three of the last four quarters while missing in one with the average surprise being 21.72%.
Lexicon Pharmaceuticals, Inc. Price and EPS Surprise
Lexicon Pharmaceuticals, Inc. price-eps-surprise
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Lexicon Pharmaceuticals, Inc. Quote
BioNTech
BNTX
This Germany-based biotech has as an Earnings ESP of +32.76% and a Zacks Rank of #3. The Zacks Consensus Estimate for the fourth quarter is pegged at a loss of 58 cents per share.
In the trailing four quarters, BioNTech beat estimates in one quarter and missed in the other three with the average negative surprise being 52.01%.
BioNTech SE Sponsored ADR Price and EPS Surprise
BioNTech SE Sponsored ADR price-eps-surprise
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BioNTech SE Sponsored ADR Quote
ADMA Biologics
ADMA
This Ramsey, NJ based specialty immune globulin company has as an Earnings ESP of +5.88% and a Zacks Rank of #2. The Zacks Consensus Estimate for the fourth quarter is pegged at a loss of 17 cents per share.
In the trailing four quarters, ADMA Biologics missed estimates in two quarters and beat in the other two with the average negative surprise being 25.38%.
ADMA Biologics Inc Price and EPS Surprise
ADMA Biologics Inc price-eps-surprise
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ADMA Biologics Inc Quote
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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