A Look at Pharma ETFs After Strong Q1 Earnings

The first-quarter results of the healthcare sector have been impressive, with earnings of 85% of the sector participants that have reported so far up 46.8% on 8% revenue growth. The earnings beat ratio of 82.4% and the revenue beat ratio of 72.5% are also assuring. Combining the actual results with the estimates for the still-to-report companies, the total earnings of the sector are expected to grow 42.5% on revenue growth of 9.2% (see: all the Healthcare ETFs here).

Many industry bigwigs reported solid results, with some beating on earnings or revenues or both. As such, most pharma ETFs have delivered positive performances over the past month. iShares U.S. Pharmaceuticals ETF IHE, VanEck Vectors Pharmaceutical ETF PPH, Invesco Pharmaceuticals ETF PJP and SPDR S&P Pharmaceuticals ETF XPH have gained 1.1%, 2.5%, 0.5%, and 1.7%, respectively, while First Trust Nasdaq Pharmaceuticals ETF FTXH has shed 1.5% in a month.

Let’s delve deeper into the earnings of some of the bigwigs:

Earnings in Focus

Johnson and Johnson

Johnson & Johnson JNJ continued with its long streak of earnings beat and also outpaced revenue estimates. Earnings per share came in at $2.77, which beat the Zacks Consensus Estimate of $2.57 and improved 2.2% from the year-ago earnings. Revenues grew 2.4% year over year to $21.89 billion and outpaced the Zacks Consensus Estimate of $21.62 billion. The drugmaker raised its revenue guidance for fiscal 2025 to $91.0-$91.8 billion from $89.2-$90.0 billion, indicating year-over-year growth of 2.6%-3.6% versus the prior expectation of 0.5%-1.5%. It maintained its adjusted earnings per share guidance in the range of $10.50-$10.70 (read: ETFs in Focus Post JNJ's Q1 Earnings Beat, Dividend Hike). 

Pfizer 

Pfizer PFE topped estimates on earnings but lagged on revenues. It reported adjusted earnings per share of 92 cents, which beat the Zacks Consensus Estimate of 64 cents per share and increased 12% year over year. Revenues declined 8% year over year to $13.72 billion and missed the consensus mark of $13.89 billion. The U.S. drug giant reaffirmed its revenue guidance of $61-$64 billion and adjusted earnings per share guidance of $2.80-$3.00 for this year.

Merck 

Merck MRK topped earnings and revenue estimates. It posted earnings per share of $2.22, which surpassed the Zacks Consensus Estimate of $2.15 and improved 7% from the year-ago earnings. Revenues dropped 2% year over year to $15.53 billion but edged past the consensus mark of $15.39 billion. Merck maintained its revenue guidance in the range of $64.1-$65.6 billion for 2025 but lowered the earnings per share guidance to $8.82-$8.97 from $8.88-$9.03.

Bristol-Myers 

Bristol-Myers BMY also reported better-than-expected results. It posted an earnings per share of $1.80, outpacing the Zacks Consensus Estimate of $1.51. In the year-ago quarter, BMY had posted an adjusted loss per share of $4.40. Revenues dropped 6% year over year to $11.2 billion and edged past the Zacks Consensus Estimate of $10.7 billion. For 2025, Bristol-Myers raised its revenue guidance to $45.8-$46.8 billion from $45.5 billion and earnings per share guidance to 6.70-$7.00 from $6.55-$6.85. 

Eli Lilly and Company

Eli Lilly and Company LLY missed earnings estimates but outpaced revenue estimates. Earnings per share came in at $3.34, falling short of the Zacks Consensus Estimate of $3.52 but improving 29% from the year-ago earnings. Revenues rose 45% to $12.73 billion and edged past the estimated $12.62 billion. Eli Lilly maintained its full-year revenue guidance of $58-$61 billion, indicating year-over-year growth of 32%, and lowered its adjusted earnings per share guidance to $20.78-$22.28 from $22.50-$24.00.

ETF Angle

iShares U.S. Pharmaceuticals ETF (IHE)

iShares U.S. Pharmaceuticals ETF provides exposure to 36 U.S. companies that manufacture prescription or over-the-counter drugs or vaccines by tracking the Dow Jones U.S. Select Pharmaceuticals Index. The in-focus five firms are the top holdings in the basket, accounting for a combined 61% of the total assets, suggesting heavy concentration. iShares U.S. Pharmaceuticals ETF has $567.8 million in AUM and charges 39 bps in fees and expenses. It trades in average daily volume of 159,000 shares and carries a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: Is Healthcare Losing the Status of Safe Haven? ETFs in Focus).

VanEck Vectors Pharmaceutical ETF (PPH)

VanEck Vectors Pharmaceutical ETF follows the MVIS US Listed Pharmaceutical 25 Index and holds 25 stocks in its basket. The five firms collectively account for a 30.7% share in the fund’s basket. The product has amassed $650.1 million in its asset base and charges 36 bps in annual fees. VanEck Vectors Pharmaceutical ETF trades in average daily volume of 475,000 shares and has a Zacks ETF Rank #3 with a Medium risk outlook. 

SPDR S&P Pharmaceuticals ETF (XPH)

SPDR S&P Pharmaceuticals ETF provides exposure to pharma companies by tracking the S&P Pharmaceuticals Select Industry Index. With AUM of $140.1 million, it holds 42 securities, with the in-focus firms making up about 4% share each. SPDR S&P Pharmaceuticals ETF charges 35 bps in fees a year and trades in average daily volume of 64,000 shares. It has a Zacks ETF Rank #3 with a High risk outlook.

Invesco Pharmaceuticals ETF (PJP)

Invesco Pharmaceuticals ETF offers exposure to companies that are principally engaged in the research, development, manufacture, sale, or distribution of pharmaceuticals and drugs of all types. It follows the Dynamic Pharmaceuticals Intellidex Index and holds 31 stocks in its basket, with the in-focus firms making up for a combined 21.8% share. Invesco Pharmaceuticals ETF has AUM of about $233.7 million and charges 56 bps in fees and expenses. It trades in an average daily volume of 10,000 shares and has a Zacks ETF Rank #3 with a High risk outlook. 

First Trust Nasdaq Pharmaceuticals ETF (FTXH)

First Trust Nasdaq Pharmaceuticals ETF tracks the Nasdaq US Smart Pharmaceuticals Index, holding 50 securities in its basket. The in-focus five firms account for a combined 32% of the assets. FTXH has AUM of $13.5 million and trades in average daily volume of 3,000 shares. First Trust Nasdaq Pharmaceuticals ETF charges 60 bps in annual fees and has a Zacks ETF Rank #3.

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