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3 ETFs to Watch on Biotech Earnings

The earnings season is off to a flying start with equity markets scaling record highs, owing to a slew of upbeat economic data, strong corporate performance and President Donald Trump's tax reform proposal. However, the performance has been a mixed bag for biotech companies, with some beating market expectations, while a few failing to do so (read: U.S. Fiscal Deficit at 3.5% of GDP: ETFs in Focus).


We will now discuss the performance of a few biotech giants such as Amgen Inc AMGN, Gilead Sciences GILD, Biogen Inc BIIB and Alexion Pharmaceuticals ALXN (read: Should You Keep Your Portfolio Healthy with Biotech ETFs?).


Earnings in Focus


Amgen reported third-quarter 2017 adjusted earnings of $3.27 per share on Oct 25, 2017, surpassing the Zacks Consensus Estimate of $3.09 and increasing 8.3% from $3.02 per share in the year-ago quarter. The company also beat the Zacks Consensus Estimate on the revenue front. Amgen reported revenues of $5.773 billion, surpassing the Zacks Consensus Estimate of $5.743 billion but decreased 0.7% from $5.811 billion in the year-ago quarter.


The company updated its full-year non-GAAP EPS guidance to the range $10.96-$11.20 from the previous guided range of $10.79-$11.37, owing to hurricane-recovery costs. It also updated its revenue guidance to the range of $22.7-$23 billion from the previous guided range of $22.5-$23 billion. The company’s shares lost around 0.8% during after-hours trading on Oct 25, 2017, after it revised down its guidance.


Gilead Sciences reported third-quarter 2017 adjusted earnings of $2.06 per share on Oct 26, 2017, missing the Zacks Consensus Estimate of $2.09 and decreasing more than 25.1% from $2.75 per share in the year-ago quarter. However, the company beat the Zacks Consensus Estimate on the revenue front. The company reported revenues of $6.512 billion, surpassing the Zacks Consensus Estimate of $6.329 billion but decreased more than 13.2% from $7.500 billion in the year-ago quarter.


The company updated its full-year revenue guidance to the range of $24.5-$25.5 billion from the previous guided range of $24-$25.5 billion. The company’s shares fell around 3.8% in after-hours trading on Oct 26, 2017, owing to the EPS miss.


Biogen Inc reported third-quarter adjusted earnings per share of $6.31 on Oct 24, 2017, surpassing the Zacks Consensus Estimate of $5.70 and increasing 21.6% from $5.19 per share in the year-ago quarter. The company reported revenues of $3.078 billion, surpassing the Zacks Consensus Estimate of $3.036 billion and increasing roughly 4.1% from $2.956 billion in the year-ago quarter.


The company’s shares declined 3.9% at market close on Oct 24 due to weaker-than-expected sales of its sclerosis franchise.


Alexion Pharmaceuticals Inc
reported third-quarter adjusted earnings per share of $1.44 on Oct 26, 2017, surpassing the Zacks Consensus Estimate of $1.33 and increasing roughly 17.1% from $1.23 per share in the year-ago quarter. The company reported revenues of $859 million, which failed to beat the consensus estimate of $867 million but increased roughly 7.5% from $799 million in the year-ago quarter.


The company updated its full-year non-GAAP EPS guidance to the range of $5.50-$5.65 and increased its revenue guidance to $3.475-$3.525 billion. The company’s shares declined around 4.5% at market close on Oct 26, 2017, primarily due to the revenue miss.


We will now discuss a few ETFs with high exposure to the companies discussed.


iShares Nasdaq Biotechnology ETF IBB


This fund seeks to provide exposure to the biotech industry. It has AUM of $9.5 billion and charges a fee of 47 basis points a year. The fund has 8.4% exposure to Amgen, 8.3% to Biogen, 8.0% to Gilead and 3.9% to Alexion (as of Oct 25, 2017). The fund has returned 17.3% in a year and 18.3% year to date (as of Oct 26, 2017). It has a Zacks ETF Rank #3 (Hold) with a High risk outlook.


VanEck Vectors Biotech ETF BBH


This fund has AUM of $668.8 million and charges a fee of 35 basis points a year. The fund has 10.0% exposure to Amgen, 9.5% to Gilead, 5.5% to Biogen and 4.2% to Alexion (as of Oct 26, 2017). The fund has returned 18.2% in a year and 17.5% year to date (as of Oct 26, 2017). It has a Zacks ETF Rank #3 with a High risk outlook.


ProShares Ultra Nasdaq Biotechnology ETF BIB


This fund has AUM of $486.9 million and charges a fee of 95 basis points a year. The fund has 8.4% exposure to Amgen, 7.9% to Biogen, 7.7% to Gilead and 3.9% to Alexion (as of Sep 30, 2017). The fund has returned 15.75% in the last one year and 41.79% year to date (as of Oct 26, 2017).


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ISHARES NDQ BIO (IBB): ETF Research Reports
 
PRO-ULT NDQ BIO (BIB): ETF Research Reports
 
VANECK-BIOTECH (BBH): ETF Research Reports
 
Alexion Pharmaceuticals, Inc. (ALXN): Free Stock Analysis Report
 
Gilead Sciences, Inc. (GILD): Free Stock Analysis Report
 
Amgen Inc. (AMGN): Free Stock Analysis Report
 
Biogen Inc. (BIIB): Free Stock Analysis Report
 
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