It has been an interesting earnings season for the Medical sector so far. The sector primarily comprises pharma/biotech and medical device companies.
Most of the large drug and biotech companies have already announced their second-quarter results. Most companies beat estimates for earnings and sales. A majority of these drugmakers also raised their guidance for 2023. As expected, COVID-19 drug sales during the quarter declined significantly due to lower demand. Though pharma giants like AstraZeneca, Merck and Pfizer reported a steep decline in revenues from their COVID-19 products, sales of their non-COVID products registered a healthy year-over-year growth. In fact, AstraZeneca and Merck reported better-than-expected Q2 results — beating earnings and sales estimates — despite generating nearly negligible sales from their COVID-19 products.
The Earnings Trends report indicates that as of Aug 2, 56.9% of the companies in the Medical sector — representing 69.1% of the sector’s market capitalization — reported quarterly earnings. About 84.8% of participants beat estimates on both earnings and revenues. While earnings declined 33.8% year over year, revenues rose 4.5% from the year-ago period’s levels. Overall, second-quarter earnings of the Medical sector are expected to decline by 31.1%. Sales are expected to increase by 4.3%, each from the year-ago quarter’s respective reported figures.
Zeroing in on Winners
Here we have highlighted four biotech companies — Axsome Therapeutics AXSM, Arcturus Therapeutics Holdings ARCT, Emergent BioSolutions EBS and Novavax NVAX — that are expected to deliver a beat in their upcoming quarterly results.
Earnings ESP is our proprietary methodology for determining the stocks with 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 made with the help of the Zacks Stock Screener.
Our research shows that the chance of an earnings surprise for stocks with this combination 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 Biotech Stocks That Match the Criteria
Axsome is focused on developing novel therapies for central nervous system conditions that have limited treatment options. Axsome has an Earnings ESP of +1.49% and a Zacks Rank #2. The Zacks Consensus Estimate for second-quarter earnings stands at a loss of $1.24 per share.
Axsome beat earnings estimates in three of the last four quarters while missing the mark on one occasion. The company delivered a trailing four-quarter earnings surprise of 22.34% on average. AXSM is scheduled to report earnings on Aug 7, before the opening bell.
Arcturus Therapeutics Holdings
A clinical-stage biotech, Arcturus is focused on developing medicines and vaccines based on mRNA technology. Arcturus Therapeutics has an Earnings ESP of +711.77% and a Zacks Rank #3. The Zacks Consensus Estimate for second-quarter earnings is pegged at 9 cents per share.
Arcturus beat earnings estimates in three of the last four quarters while missing the mark on one occasion. The company delivered a trailing four-quarter earnings surprise of 88.05% on average. ARCT is scheduled to report earnings on Aug 7, after market close.
Emergent, a global specialty biopharmaceutical company, offers specialized products to healthcare providers and governments to fulfil unmet medical needs and combat emerging public health threats. Emergent has an Earnings ESP of +13.68% and a Zacks Rank #3. The Zacks Consensus Estimate for second-quarter earnings stands at a loss of 95 cents per share.
Emergent missed estimates in each of the last four quarters, delivering a negative earnings surprise of 634.97%. EBS is slated to release earnings on Aug 8, after market close.
A biotechnology company, Novavax, is engaged in developing innovative vaccines to prevent serious infectious diseases. Novavax has an Earnings ESP of +67.61% and a Zacks Rank of 3. The Zacks Consensus Estimate for the second quarter is pegged at a loss of $1.24 per share.
Novavax missed estimates in each of the last four quarters, delivering a negative earnings surprise of 141.13%. NVAX is scheduled to release results on Aug 8, before the opening bell.
Novavax, Inc. (NVAX): Free Stock Analysis Report
Arcturus Therapeutics Holdings Inc. (ARCT): Free Stock Analysis Report
Emergent Biosolutions Inc. (EBS): Free Stock Analysis Report
Axsome Therapeutics, Inc. (AXSM): Free Stock Analysis Report
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