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The second-quarter earnings season for the drug and biotech sector accelerated last week and will be in full swing this week, with many large drugmakers like Pfizer PFE, Eli Lilly LLY, Amgen AMGN, Gilead Sciences GILD and Novo Nordisk NVO, among others, due to announce results. The earnings season for the sector kicked off around mid-July when Johnson & Johnson reported solid second-quarter results, beating estimates for both earnings and sales.
Novartis and Bristol Myers followed suit, beating second-quarter estimates for both earnings and revenues. Merck beat estimates for earnings while meeting the same for revenues in the second quarter. Meanwhile, AstraZeneca met estimates for earnings while beating the same for revenues in the second quarter. French drugmaker Sanofi came out with disappointing second-quarter results as it missed estimates for both earnings and sales.
Per the Zacks classification, the pharma/biotech industry falls under the broader Medical sector, comprising pharma/biotech and generic companies, and medical device companies.
Per the Earnings Trends report, as of July 29, 33.3% of the companies in the Medical sector — representing 40.9% of the sector’s market capitalization — reported quarterly earnings. Out of these, 80% surpassed earnings estimates, while 95% beat the same for revenues. Earnings declined 10.4% year over year, while revenues rose 11.9%. Overall, second-quarter earnings of the Medical sector are expected to remain flat, while sales are projected to rise 8.7% from the year-ago quarter.
Let’s see how things have shaped up for these companies ahead of their earnings announcements.
PFE’s performance has been solid, with the company exceeding earnings expectations in each of the trailing four quarters. It delivered a four-quarter earnings surprise of 43.49%, on average. In the last reported quarter, the company delivered an earnings surprise of 43.75%.
The Zacks Consensus Estimate for second-quarter sales and earnings stands at $13.78 billion and 58 cents per share, respectively.
Pfizer has an Earnings ESP of +1.43% and a Zacks Rank #3 (Hold), indicating a beat this time around. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Per our proven model, companies with the combination of a positive Earnings ESP and a Zacks Rank #1, #2 (Buy) or #3 have a good chance of delivering an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Higher sales of Pfizer’s products like Vyndaqel family, Padcev, Lorbrena and Nurtec are expected to have offset softer sales of some key products like Prevnar, Xeljanz, Eliquis and Ibrance in the second quarter. The Medicare Part D redesign under the Inflation Reduction Act (IRA) is likely to have impacted U.S. revenues, particularly sales of higher-priced drugs, including Vyndaqel, Ibrance, Xtandi and Xeljanz.
PFE is scheduled to report second-quarter results on Aug. 5, before the opening bell.
Pfizer Inc. price-eps-surprise | Pfizer Inc. Quote
LLY’s performance has been mixed, with the company exceeding earnings expectations in two of the trailing four quarters and missing the same on the remaining two occasions. It delivered a four-quarter earnings surprise of 6.69%, on average. In the last reported quarter, the company delivered a negative earnings surprise of 5.11%.
The Zacks Consensus Estimate for second-quarter sales and earnings stands at $14.75 billion and $5.61 per share, respectively.
LLY has an Earnings ESP of +0.18% and a Zacks Rank #3, indicating a positive earnings surprise this time around.
In the second quarter, Lilly’s top-line growth is likely to have been driven by its popular GLP-1 drugs, diabetes drug Mounjaro and weight loss medicine, Zepbound, driven by high demand trends.
Higher demand and volume growth for Lilly’s other key drugs like Emgality, Jardiance, Olumiant, Taltz and Verzenio are likely to have provided top-line support in the second quarter, driven by increased demand trends.
LLY is scheduled to report second-quarter results on Aug. 7, before the opening bell.
Eli Lilly and Company price-eps-surprise | Eli Lilly and Company Quote
AMGN’s performance has been strong, with earnings beating estimates in each of the trailing four quarters. The company delivered a four-quarter earnings surprise of 8.34%, on average. In the last reported quarter, the company delivered an earnings surprise of 17.79%.
The Zacks Consensus Estimate for second-quarter sales and earnings is pegged at $8.86 billion and $5.26 per share, respectively.
AMGN has an Earnings ESP of +0.56% and a Zacks Rank #3, indicating a positive surprise this time around.
Amgen’s product sales in the second quarter are likely to have been driven by strong volume growth of products like Evenity, Repatha and Blincyto, among others. However, prices of most products are expected to have declined due to higher rebates to support expanded access.
Higher volumes of newer drugs like Tezspire and Tavneos are also expected to have contributed to top-line growth, driven by an increase in new patient volume.
AMGN is scheduled to report second-quarter results on Aug. 5, after market close.
Amgen Inc. price-eps-surprise | Amgen Inc. Quote
GILD’s performance has been mixed, with earnings beating estimates in three of the trailing four quarters and missing the same on the remaining occasion. The company delivered a four-quarter earnings surprise of 16.48%, on average. In the last reported quarter, the company delivered a negative earnings surprise of 0.55%.
The Zacks Consensus Estimate for sales and earnings for the second quarter is pegged at $6.95 billion and $1.95 per share, respectively.
GILD has an Earnings ESP of +0.58% and a Zacks Rank #3, indicating a positive surprise this time around.
Gilead has a market-leading HIV franchise, led by flagship HIV therapies — Biktarvy and Descovy. HIV sales were up in the first quarter despite the impact of the new Medicare Part D model implementation due to increased demand for Biktarvy and Descovy. This trend has most likely prevailed in the second quarter as well.
Higher demand for viral hepatitis medicines has likely boosted sales of the Liver Disease portfolio in the second quarter.
GILD is scheduled to report second-quarter results on Aug. 7, after market close.
Gilead Sciences, Inc. price-eps-surprise | Gilead Sciences, Inc. Quote
NVO’s performance has been mixed, with earnings beating estimates in one of the trailing four quarters, meeting the same once and missing the same on the remaining two occasions. The company delivered a four-quarter earnings surprise of 0.02%, on average. In the last reported quarter, the company delivered in-line earnings.
The Zacks Consensus Estimate for sales and earnings for the second quarter is pegged at $11.79 billion and 93 cents per share, respectively.
NVO has an Earnings ESP of +0.22% and a Zacks Rank #4 (Sell).
Last week, NVO lowered its 2025 outlook for both sales and operating profit growth. The company expects sales to rise 8-14% in 2025, down from its earlier forecast of 13-21%. Similarly, it revised its operating profit growth projection to 10-16%, down from the prior range of 16-24%. NVO cited weaker-than-expected momentum in key markets for its semaglutide-based obesity and diabetes drugs, Wegovy and Ozempic, as reasons for the guidance cut.
Also, during the same time, Novo Nordisk reported preliminary earnings per American Depositary Receipt of 91 cents (DKK 5.96), which missed the Zacks Consensus Estimate of 94 cents. The company said its sales for the second quarter have increased 18% at a constant exchange rate.
Novo Nordisk is set to release results on Aug. 6, before the opening bell.
Novo Nordisk A/S price-eps-surprise | Novo Nordisk A/S Quote
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This article originally published on Zacks Investment Research (zacks.com).
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