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Buy 2 Biotech Bigwigs Set to Gain on Possible Earnings Beat
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The biotechnology industry had a rough first-half 2024 after a decent performance in 2023. The majority of biotech players do not generate enough revenues to fund their operations and are dependent on external funds. A biotech company starts generating revenues following a successful FDA approval and the launch of any drug.
Under this circumstance, a high interest rate regime is detrimental to the biotech industry. The primary reason for the industry’s weak performance year to date is that the Fed refrained from reducing the 23-year high interest rate, which is in the range of 5.25-5.5%.
Nevertheless, on Jul 31, in his post-FOMC meeting statement, Fed Chairman Jerome Powell indicated a rate cut of 25 basis points in the Fed fund rate in September. Moreover, the CME FedWatch tool is currently showing a 100% probability of a 25-basis point cut in September, a 75% probability of a second rate cut of 25 basis points in November and a 76% probability of a third rate cut of the same magnitude in December.
A low interest rate environment is likely to raise the margins of biotech players as these companies need huge capital to continue clinical studies before getting FDA approval. Therefore, things are likely to turn around in the second half of 2024.
The Zacks-defined Biomedical and Genetics Industry is currently ranked in the top 35% of industries. Specifically, it is ranked number 87 among 251 industries. Because it is ranked in the top half of the Zacks-ranked industries, we expect it to outperform the market over the next three to six months.
Our research shows that for stocks with the combination of a Zacks Rank #3 or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are anticipated to appreciate after their earnings release. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Illumina Inc. (ILMN - Free Report) is successfully advancing its presence in the gene-sequencing market with competitive products and a strong pipeline. ILMN’s strategic initiatives and collaborations are boosting the NGS adoption, helping the company maintain leadership in research and clinical markets.
ILMN’s growing oncology portfolio is driving advancements in cancer genomics, suggesting a long-term growth potential in this space. Moreover, ILMN offers the full range of NovaSeq X products and availed XLEAP-SBS chemistry to mid-throughput customers.
The Zacks Consensus Estimate for second-quarter and full-year 2024 earnings have improved more than 100% and 20.2%, respectively, over the last 30 days. The company reported positive earnings surprises in the last four reported quarters with an average beat of 788.5%.
Zacks Rank #1 Illumina will report on Aug 6, after the closing bell. For second-quarter 2024, ILMN has an Earnings ESP of +132.6%. The average price target of brokerage firms represents an increase of 18.7% from the last closing price of $122.35. The brokerage target price is currently in the range of $55-$110.
Image Source: Zacks Investment Research
Genmab A/S (GMAB - Free Report) specializes in the development of antibody therapeutics for the treatment of cancer. GMAB markets DARZALEX, a human monoclonal antibody for the treatment of patients with multiple myeloma (MM), teprotumumab for the treatment of thyroid eye disease, and Amivantamab for advanced or metastatic gastric or esophageal cancer and NSCLC.
GMAB operates various active pre-clinical programs. GMAB has a commercial license and collaboration agreement with Seagen Inc. to co-develop tisotumab vedotin. Genmab also has a collaboration agreement with argenx to discover, develop, and commercialize novel therapeutic antibodies with applications in immunology and oncology, and AbbVie for the development of epcoritamab, as well as collaborations with BioNTech, Janssen, and Novo Nordisk A/S.
The Zacks Consensus Estimate for second-quarter and full-year 2024 earnings have improved 3.6% and 1.8%, respectively, over the last 30 days. The company reported positive earnings surprises in two out of the last four reported quarters with an average beat of 10.2%.
Zacks Rank #2 Genmab will report on Aug 8, after the closing bell. For second-quarter 2024, GMAB has an Earnings ESP of +9.8%. The average price target of brokerage firms represents an increase of 45.4% from the last closing price of $28.35. The brokerage target price is currently in the range of $29-$53.
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Buy 2 Biotech Bigwigs Set to Gain on Possible Earnings Beat
The biotechnology industry had a rough first-half 2024 after a decent performance in 2023. The majority of biotech players do not generate enough revenues to fund their operations and are dependent on external funds. A biotech company starts generating revenues following a successful FDA approval and the launch of any drug.
Under this circumstance, a high interest rate regime is detrimental to the biotech industry. The primary reason for the industry’s weak performance year to date is that the Fed refrained from reducing the 23-year high interest rate, which is in the range of 5.25-5.5%.
Nevertheless, on Jul 31, in his post-FOMC meeting statement, Fed Chairman Jerome Powell indicated a rate cut of 25 basis points in the Fed fund rate in September. Moreover, the CME FedWatch tool is currently showing a 100% probability of a 25-basis point cut in September, a 75% probability of a second rate cut of 25 basis points in November and a 76% probability of a third rate cut of the same magnitude in December.
A low interest rate environment is likely to raise the margins of biotech players as these companies need huge capital to continue clinical studies before getting FDA approval. Therefore, things are likely to turn around in the second half of 2024.
The Zacks-defined Biomedical and Genetics Industry is currently ranked in the top 35% of industries. Specifically, it is ranked number 87 among 251 industries. Because it is ranked in the top half of the Zacks-ranked industries, we expect it to outperform the market over the next three to six months.
Our Top Picks
Meanwhile, two large biotech companies are set to beat on earnings results next week. Each of these stocks carries either a Zacks Rank # 1 (Strong Buy) or 2 (Buy) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank stocks here.
Our research shows that for stocks with the combination of a Zacks Rank #3 or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are anticipated to appreciate after their earnings release. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Illumina Inc. (ILMN - Free Report) is successfully advancing its presence in the gene-sequencing market with competitive products and a strong pipeline. ILMN’s strategic initiatives and collaborations are boosting the NGS adoption, helping the company maintain leadership in research and clinical markets.
ILMN’s growing oncology portfolio is driving advancements in cancer genomics, suggesting a long-term growth potential in this space. Moreover, ILMN offers the full range of NovaSeq X products and availed XLEAP-SBS chemistry to mid-throughput customers.
The Zacks Consensus Estimate for second-quarter and full-year 2024 earnings have improved more than 100% and 20.2%, respectively, over the last 30 days. The company reported positive earnings surprises in the last four reported quarters with an average beat of 788.5%.
Zacks Rank #1 Illumina will report on Aug 6, after the closing bell. For second-quarter 2024, ILMN has an Earnings ESP of +132.6%. The average price target of brokerage firms represents an increase of 18.7% from the last closing price of $122.35. The brokerage target price is currently in the range of $55-$110.
Image Source: Zacks Investment Research
Genmab A/S (GMAB - Free Report) specializes in the development of antibody therapeutics for the treatment of cancer. GMAB markets DARZALEX, a human monoclonal antibody for the treatment of patients with multiple myeloma (MM), teprotumumab for the treatment of thyroid eye disease, and Amivantamab for advanced or metastatic gastric or esophageal cancer and NSCLC.
GMAB operates various active pre-clinical programs. GMAB has a commercial license and collaboration agreement with Seagen Inc. to co-develop tisotumab vedotin. Genmab also has a collaboration agreement with argenx to discover, develop, and commercialize novel therapeutic antibodies with applications in immunology and oncology, and AbbVie for the development of epcoritamab, as well as collaborations with BioNTech, Janssen, and Novo Nordisk A/S.
The Zacks Consensus Estimate for second-quarter and full-year 2024 earnings have improved 3.6% and 1.8%, respectively, over the last 30 days. The company reported positive earnings surprises in two out of the last four reported quarters with an average beat of 10.2%.
Zacks Rank #2 Genmab will report on Aug 8, after the closing bell. For second-quarter 2024, GMAB has an Earnings ESP of +9.8%. The average price target of brokerage firms represents an increase of 45.4% from the last closing price of $28.35. The brokerage target price is currently in the range of $29-$53.
Image Source: Zacks Investment Research