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What Lies in Store for Healthcare ETFs in Q2 Earnings?
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The healthcare sector has gained momentum lately on market rotation, with investors rushing to buy beaten-down stocks while shunning the hot technology sector. Its non-cyclical nature, which provides a cushion to the portfolio in times of economic or political turmoil, also added to the strength.
As such, ultra-popular ETFs, Health Care Select Sector SPDR Fund (XLV - Free Report) , Vanguard Health Care ETF (VHT - Free Report) , iShares U.S. Healthcare ETF (IYH - Free Report) and Fidelity MSCI Health Care Index ETF (FHLC - Free Report) are up around 8% each over the past three months.
The further price movement of these funds depends on earnings releases from some big names like Pfizer (PFE - Free Report) , Merck (MRK - Free Report) , Amgen (AMGN - Free Report) , AbbVie (ABBV - Free Report) , Bristol Myers Squibb (BMY - Free Report) and Eli Lilly (LLY - Free Report) that dominate returns. These firms are lined up to report their earnings in the next two weeks. All these stocks collectively account for a 31.9% share in XLV, 31.7% in IYH, 28.6% in FHLC and 27.9% in VHT (see: all the Healthcare ETFs here).
Let’s dig deeper into the earnings picture of these companies, which will drive the performance of the abovementioned funds in the coming days.
According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Inside Our Surprise Prediction for These Stocks
Pfizer has an Earnings ESP of -2.44% and a Zacks Rank #3. The stock witnessed a positive earnings estimate revision of a penny for the to-be-reported quarter over the past seven days. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. Pfizer delivered an earnings surprise of 66.40%, on average, in the past four quarters. Pfizer is scheduled to report earnings on Jul 30, before the opening bell.
Merck is slated to report results on Jul 30, before market open. It has an Earnings ESP of +1.43% and a Zacks Rank #3. The stock witnessed a positive earnings estimate revision of a penny over the past seven days for the to-be-reported quarter. Additionally, Merck delivered a four-quarter beat of 38.72%, on average.
Amgen has an Earnings ESP of +1.03% and carries a Zacks Rank #3. It witnessed a positive earnings estimate revision of 4 cents over the past seven days for the quarter to be reported. The earnings surprise track over the past four quarters is strong, with the average beat being 6.42%. Amgen will report earnings on Aug 6.
AbbVie has an Earnings ESP of 0.00% and a Zacks Rank #3. It saw a negative earnings estimate revision of 22 cents over the past seven days for the to-be-reported quarter. The company delivered an earnings surprise of 2.69%, on average, in the last four quarters. The company is scheduled to report on Jul 25 before the opening bell (read: 5 Favorite Sectors This Earnings Season and Their ETFs).
Bristol-Myers will report earnings on Jul 26 before the opening bell. It has an Earnings ESP of -1.25% and a Zacks Rank #3. The Zacks Consensus Estimate is currently pegged at $1.64 for the to-be-reported quarter, down from earnings of $1.67 per share estimated 30 days ago. The stock delivered an earnings surprise of 4.18%, on average, over the past four quarters.
Eli Lilly is scheduled to release earnings on Aug 8, before the opening bell. It has an Earnings ESP of -0.96% and a Zacks Rank #3. The stock saw a negative earnings estimate revision of a penny over the past seven days for the to-be-reported quarter. Eli Lilly delivered an earnings surprise of 58.59%, on average, over the last four quarters.
Summing Up
With most companies witnessing positive earnings estimate revision, which is a precursor to earnings, the healthcare sector is expected to come up with strong results. The sector is expected to see earnings growth of 18.4% in the second quarter, per the Earnings Trend report. XLV and VHT have a Zacks ETF Rank #1 each, while IYH and FHLC have a Zacks ETF Rank #3.
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What Lies in Store for Healthcare ETFs in Q2 Earnings?
The healthcare sector has gained momentum lately on market rotation, with investors rushing to buy beaten-down stocks while shunning the hot technology sector. Its non-cyclical nature, which provides a cushion to the portfolio in times of economic or political turmoil, also added to the strength.
As such, ultra-popular ETFs, Health Care Select Sector SPDR Fund (XLV - Free Report) , Vanguard Health Care ETF (VHT - Free Report) , iShares U.S. Healthcare ETF (IYH - Free Report) and Fidelity MSCI Health Care Index ETF (FHLC - Free Report) are up around 8% each over the past three months.
The further price movement of these funds depends on earnings releases from some big names like Pfizer (PFE - Free Report) , Merck (MRK - Free Report) , Amgen (AMGN - Free Report) , AbbVie (ABBV - Free Report) , Bristol Myers Squibb (BMY - Free Report) and Eli Lilly (LLY - Free Report) that dominate returns. These firms are lined up to report their earnings in the next two weeks. All these stocks collectively account for a 31.9% share in XLV, 31.7% in IYH, 28.6% in FHLC and 27.9% in VHT (see: all the Healthcare ETFs here).
Let’s dig deeper into the earnings picture of these companies, which will drive the performance of the abovementioned funds in the coming days.
According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Inside Our Surprise Prediction for These Stocks
Pfizer has an Earnings ESP of -2.44% and a Zacks Rank #3. The stock witnessed a positive earnings estimate revision of a penny for the to-be-reported quarter over the past seven days. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. Pfizer delivered an earnings surprise of 66.40%, on average, in the past four quarters. Pfizer is scheduled to report earnings on Jul 30, before the opening bell.
Merck is slated to report results on Jul 30, before market open. It has an Earnings ESP of +1.43% and a Zacks Rank #3. The stock witnessed a positive earnings estimate revision of a penny over the past seven days for the to-be-reported quarter. Additionally, Merck delivered a four-quarter beat of 38.72%, on average.
Amgen has an Earnings ESP of +1.03% and carries a Zacks Rank #3. It witnessed a positive earnings estimate revision of 4 cents over the past seven days for the quarter to be reported. The earnings surprise track over the past four quarters is strong, with the average beat being 6.42%. Amgen will report earnings on Aug 6.
AbbVie has an Earnings ESP of 0.00% and a Zacks Rank #3. It saw a negative earnings estimate revision of 22 cents over the past seven days for the to-be-reported quarter. The company delivered an earnings surprise of 2.69%, on average, in the last four quarters. The company is scheduled to report on Jul 25 before the opening bell (read: 5 Favorite Sectors This Earnings Season and Their ETFs).
Bristol-Myers will report earnings on Jul 26 before the opening bell. It has an Earnings ESP of -1.25% and a Zacks Rank #3. The Zacks Consensus Estimate is currently pegged at $1.64 for the to-be-reported quarter, down from earnings of $1.67 per share estimated 30 days ago. The stock delivered an earnings surprise of 4.18%, on average, over the past four quarters.
Eli Lilly is scheduled to release earnings on Aug 8, before the opening bell. It has an Earnings ESP of -0.96% and a Zacks Rank #3. The stock saw a negative earnings estimate revision of a penny over the past seven days for the to-be-reported quarter. Eli Lilly delivered an earnings surprise of 58.59%, on average, over the last four quarters.
Summing Up
With most companies witnessing positive earnings estimate revision, which is a precursor to earnings, the healthcare sector is expected to come up with strong results. The sector is expected to see earnings growth of 18.4% in the second quarter, per the Earnings Trend report. XLV and VHT have a Zacks ETF Rank #1 each, while IYH and FHLC have a Zacks ETF Rank #3.