The third-quarter earnings season is in full swing for the drug and biotech sector. Several large drug and biotech stocks have announced third-quarter results so far. A few industry players like Merck, Biogen, Sanofi, Gilead beat on both earnings and sales, while others like AbbVie and Novartis reported mixed results.

The Zacks classification shows the pharma/biotech industry to fall under the broader Medical sector, comprising pharma/biotech and generic companies, and medical device companies.

As of Oct 26, the Earnings Trends report confirms that 23.2% of the Medical sector participants, constituting 43% of the sector’s market capitalization, already posted earnings. While 84.6% of the companies beat on earnings, 92.3% surpassed on revenues. Earnings decreased 1.8% year over year, while revenues rose 7.5%.

Overall, third-quarter earnings of the Medical sector are expected to decline 8.3%, while sales are projected to increase 3.8%.

Let's see how things have shaped up for Pfizer Inc. (PFE Quick QuotePFE - Free Report) , Eli Lilly and Company (LLY Quick QuoteLLY - Free Report) , Incyte Corporation (INCY Quick QuoteINCY - Free Report) , Exelixis, Inc. (EXEL Quick QuoteEXEL - Free Report) and Blueprint Medicines Corporation (BPMC Quick QuoteBPMC - Free Report) in the third quarter. These companies will release earnings on Nov 1.

Pfizer

Pfizer’s performance exceeded earnings expectations in three of the trailing four quarters and missed the mark on the remaining occasion. PFE delivered a trailing four-quarter earnings surprise of 16.32%, on average.

Pfizer’s has an Earnings ESP of -1.36% as the Zacks Consensus Estimate is pegged at $1.47 per share and the Most Accurate Estimate stands at $1.45 per share.

Our proven model does not conclusively predict an earnings beat for Pfizer this time around. The combination of a positive Earnings ESP and a Zacks Rank #1, 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here, as shown below.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

PFE has a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Pfizer’s revenues in the third quarter are likely to have been driven by direct sales and alliance revenues from its partner BioNTech for the COVID-19 vaccine Comirnaty and its in-house oral antiviral COVID pill Paxlovid.

Paxlovid is expected to have been a greater contributor to the top line than Comirnaty, backed by launches in several countries in 2022.

This apart, higher alliance revenues from PFE’s key brand Eliquis, higher sales of the Prevnar family of vaccines and drugs like Vyndaqel/Vyndamax, and higher biosimilar revenues are likely to have contributed to sales growth in the third quarter of 2022.

Eli Lilly

Lilly’s performance exceeded earnings expectations in one of the trailing four quarters and missed the mark on the remaining three occasions. LLY came up with a trailing four-quarter negative earnings surprise of 5.11%, on average.

Our proven model does not conclusively predict an earnings beat for Lilly this time around. LLY has an Earnings ESP of -2.50% as the Zacks Consensus Estimate stands at $1.97 per share and the Most Accurate Estimate is pegged at $1.93 per share. LLY presently has a Zacks Rank of 3.

Key catalysts for Lilly’s revenues in the third quarter are likely to have been higher demand and volume growth for its key drugs, including Trulicity, Taltz, Verzenio, Jardiance, Olumiant and Emgality.

Newer products like Retevmo and Mounjaro (tirzepatide) are likely to have contributed to sales growth.

Incyte

Incyte’s performance exceeded earnings expectations in two of the trailing four quarters and missed the same on the other two occasions. INCY witnessed a trailing four-quarter negative earnings surprise of 2.13%, on average.

Our proven model does not conclusively predict an earnings beat for Incyte this time around. INCY has an Earnings ESP of -2.24% as the Zacks Consensus Estimate stands at 72 cents per share and the Most Accurate Estimate is pegged at 70 cents per share. INCY has a Zacks Rank of 3, currently.

Incyte’s revenues in the third quarter are likely to have been driven by the sales of its lead drug Jakafi (ruxolitinib) in the United States as well as other marketed drugs.

Exelixis

Exelixis’ performance exceeded earnings expectations in three of the trailing four quarters and missed the same on the remaining occasion. EXEL delivered a trailing four-quarter earnings surprise of 84.36%, on average.

Our proven model does not conclusively predict an earnings beat for Exelixis this time around. EXEL has an Earnings ESP of -2.40% as the Zacks Consensus Estimate stands at 25 cents per share and the Most Accurate Estimate is pegged at 24 cents per share. EXEL is presently Zacks #3 Ranked.

Exelixis’ revenues in the third quarter are likely to have been primarily driven by the sales of its lead drug Cabometyx as well as other marketed drugs.

The uptake of Cabometyx increased in the last reported quarter, primarily led by higher sales volume. The trend is likely to have continued in the third quarter as well.

Collaboration revenues comprising license revenues and collaboration services revenues are likely to have declined in the third quarter due to a decline in development cost reimbursements earned.

Blueprint Medicines

Blueprint Medicines’ earnings missed expectations in three of the trailing four quarters and met the same on the remaining occasion. BPMC witnessed a trailing four-quarter negative earnings surprise of 19.49%, on average.

Our proven model predicts an earnings beat for Blueprint Medicines this reporting cycle. BPMC’s Earnings ESP is +1.49% as the Zacks Consensus Estimate stands at a loss of $2.51 per share and the Most Accurate Estimate is pegged at a loss of $2.47 per share. BPMC has a Zacks Rank of 3 at present.

Blueprint Medicines’ revenues in the third quarter are likely to have been primarily driven by the sales of its lead marketed drug, Ayvakit/Ayvakyt (brand name of Ayvakit in Europe).

Ayvakit/Ayvakyt sales increased significantly year over year in the last reported quarter, primarily boosted by strong patient demand. The trend is likely to have continued in the third quarter as well.

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