The second-quarter earnings season for the drug and biotech sector is almost halfway through. Several large drug and biotech stocks have already announced second-quarter results so far, while some are expected to report this week. The results have been encouraging so far, with most industry players like J&J, AbbVie, Novartis, Merck, Bristol-Myers and AstraZeneca beating on both earnings and sales. Sanofi came out with mixed results.

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 Jul 31, 49.2% of the companies in the Medical sector — representing 61% of the sector’s market capitalization — reported quarterly earnings. Of these, 82.8% beat on earnings and 79.3% beat on revenues. Earnings increased 31% year over year, while revenues grew 5.8%. Overall, second-quarter earnings of the Medical sector are expected to increase 15.7% year over year, while sales are likely to grow 8.1%.

Amgen Inc. (AMGN Quick QuoteAMGN - Free Report) is scheduled to report second-quarter results on Aug 6, after market close. Gilead Sciences, Inc. (GILD Quick QuoteGILD - Free Report) is scheduled to report second-quarter results on Aug 8 after the closing bell. Eli Lilly and Company (LLY Quick QuoteLLY - Free Report) and Viatris Inc. (VTRS Quick QuoteVTRS - Free Report) are scheduled to report second-quarter results on Aug 8, before the opening bell. Novo Nordisk A/S (NVO Quick QuoteNVO - Free Report) is slated to release second-quarter results on Aug 7.

Let’s see how these biotech companies are likely to have performed in the soon-to-be-reported quarter.

Amgen

Amgen beat earnings beating estimates in all the trailing four quarters. The company delivered a four-quarter earnings surprise of 6.42%, on average. In the last reported quarter, AMGN beat earnings estimates by 5.32%.

Our proven model predicts an earnings beat for Amgen in the to-be-reported quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for a likely positive surprise. This is the case here, as elaborated below.

Amgen’s Earnings ESP is +0.11% as the Most Accurate Estimate of $4.94 is pegged higher than the Zacks Consensus Estimate of $4.93. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Amgen has a Zacks Rank #3 currently.

Amgen’s product sales are expected to have been driven by strong volume growth of products like Evenity, Repatha, Prolia and Kyprolis, among others. However, prices of most products are expected to have declined due to higher rebates to support expanded access.

Gilead Sciences

Gilead Sciences’ performance has been mixed, with earnings beating estimates in two of the trailing four quarters and missing the same on the remaining two occasions, delivering an average earnings surprise of 3.20%. In the last reported quarter, GILD beat earnings expectations by 11.41%.

The Zacks Consensus Estimate for second-quarter revenues is pegged at $6.64 billion, while the same for earnings is pinned at $1.61 per share. GILD currently has an Earnings ESP of +0.25% and a Zacks Rank #3, which indicates a beat.

Higher Biktarvy sales, boosted by higher demand, are likely to have fueled Gilead’s sales in the second quarter. Biktarvy continues to gain market share in the United States, outpacing all other branded regimens for HIV treatment. Descovy’s revenues, too, are likely to have increased as the pre-exposure prophylaxis market continued to demonstrate robust growth.

Eli Lilly and Company

Eli Lilly’s performance has been solid, with earnings beating estimates in each of the trailing four quarters. The company delivered a four-quarter earnings surprise of 58.59%, on average. In the last reported quarter, LLY beat earnings expectations by 1.98%.

LLY has an Earnings ESP of -3.02%  and a Zacks Rank #3. The Zacks Consensus Estimate for sales and earnings is pegged at $9.83 billion and $2.64 per share, respectively.

In the second quarter, top-line growth is expected to have been driven by strong demand for Lilly’s FDA-approved tirzepatide medicines, diabetes drug Mounjaro and weight loss medicine, Zepbound.

Higher demand and volume growth for Lilly’s key growth drugs (select products launched prior to 2022 like Cyramza, Emgality, Jardiance, Olumiant, Retevmo, Taltz, Trulicity, Tyvyt and Verzenio) are likely to have provided top-line support, driven by increased demand trends.

Viatris

Viatris’ earnings beat estimates in two of the trailing four quarters and missed in the remaining two, delivering an average surprise of 0.15%. In the last reported quarter, VTRS missed earnings estimates by 1.47%.

VTRS has an Earnings ESP of +1.47% as the Zacks Consensus Estimate is pinned at 68 cents and the Most Accurate Estimate is pegged at 69 cents.

Viatris currently carries a Zacks Rank #4 (Sell).

The Zacks Consensus Estimate for revenues is pegged at $3.82 billion, while the same for earnings is pinned at $0.68 per share.

Growth in Developed Markets, driven by solid performance in Europe, is likely to have boosted the top line in the second quarter. Development in Europe might have been driven by a strong brand portfolio, generics business in Italy and France and a benefit from new product launches. The generic business in North America is likely to have seen an improvement due to new product launches, including Breyna, as well as strong performance in base business complex products, such as Wixela.

Novo Nordisk A/S

NVO’s performance has been mixed over the trailing four quarters, with earnings beating estimates in three quarters and missing the mark once. On average, Novo Nordisk registered an earnings surprise of 3.80% in the last four quarters. In the last reported quarter, the company came up with an earnings surprise of 7.79%.

Novo Nordisk has an Earnings ESP of -7.61% and a Zacks Rank #3. The Zacks Consensus Estimate for quarterly revenues in the to-be-reported quarter is pegged at $9.91 billion, while the same for earnings is pinned at 74 cents per share.

Wegovy is likely to have been the key top-line contributor for Novo Nordisk in the second quarter on the back of strong prescription trends.

Revenue growth in second-quarter 2024 is expected to have been driven by the strong demand for NVO’s diabetes and obesity care medicines, especially semaglutide. Notably, semaglutide, a GLP-1 agonist, is approved as an Ozempic pre-filled pen and Rybelsus oral tablet for type II diabetes and as Wegovy injection for weight management.

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