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Biotech ETFs in Focus on String of Q2 Earnings Beat

Sanghamitra Saha
Updated
Affimed (AFMD) needs investors to pay close attention to the stock based on moves in the options market lately.

The biotech sector has been performing remarkably well driven by a wave of mergers & acquisitions, new tax legislation, and a positive regulatory backdrop. Strong Q2 earnings results have also added to the strength as most of the biotech giants such as Amgen Inc (AMGN), Gilead Sciences (GILD), Biogen Inc (BIIB) and Alexion Pharmaceuticals (ALXN) have topped the estimates on both earnings and revenues(read: Health Care ETFs)  

 

Earnings in Focus

 

Amgen reported second-quarter earnings per share of $3.83, which beat the Zacks Consensus Estimate of $3.52 and improved from the year-ago earnings of $3.27. Revenues of $6.06 billion also came ahead of the estimated $5.72 billion and were up from $5.81 billion reported in the year-ago quarter.

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Amgen raised its sales and earnings guidance for 2018. Better-than-expected second-quarter results and an optimistic outlook for the rest of the year led to the increase in earnings guidance.

 

The company now expects its revenues in the range of $22.5-$23.2 billion compared with the previous prediction of $21.9-$22.8 billion. Adjusted earnings are now anticipated in the range of $13.30-$14.00 in 2018 compared with the previous projection $12.80-$13.70.

 

Gilead Sciences beat the earnings estimate by 28 cents and but 76 cents lower than the year-ago quarter. The revenue estimates were beaten by $470 million but $1493 million below the year-ago quarter.

 

Gilead continues to expect net product sales in the range of $20-$21 billion. The company raised its diluted, adjusted EPS guidance range to $1.50-$1.60 per share from the previously announced $1.41-$1.51.

 

Biogen reported a positive surprise of 11.11% on earnings and 3.3% on revenues. Earnings improved year over year by 15.08% and revenues by 9.06%.

 

Biogen raised its revenue expectations for the full year in the range of $13-$13.2 billion from the previous expectation of $12.7-$13 billion. The company also increased its earnings expectation from $24.20-$25.20 per share to $24.90-$25.50.

 

Alexion Pharmaceuticals beat the Zacks Consensus Estimate on earnings by 39 cents and showed a year-over-year improvement of 43.51%.Revenues also topped by the estimated $63 million and marks a year-over-year improvement of 14.59%.

 

The company raised its earnings per share and revenue guidance for 2018. It expects earnings per share in the range of $7.00-$7.15, up from the previous forecast of $6.75-$6.90. Alexion projects revenues to be in the band of $3.98-$4.01 billion, up from its previous expectation of $3.93-$3.99 billion.

 

The earnings boost has pushed the biotech ETFs higher over the past one month. Below, we have highlighted the four most-popular ETFs with high exposure to the above-mentioned companies. 

 

iShares Nasdaq Biotechnology ETF (IBB)

 

This fund tracks the NASDAQ biotechnology index. The fund has 191 holdings with 28.78% weightage to the mentioned four companies. It has an AUM of $9.25 billion and an expense ratio of 0.47%.The fund has gained 1.52% over a one-month period. It has a Zacks ETF Rank of #3 (Hold) with a High risk outlook (read: What investors need to know about Biotech ETFs).

 

VanEck Vectors Biotech ETF (BBH)

 

The fund tracks the MVIS US Listed Biotech 25 Index. It has a pool of 25 stocks with 28.78% the weightage of the mentioned four companies. It has an AUM of $472.3 million and an expense ratio 0.35%.The fund has gained 3.52% over a one-month period. It sports a Zacks ETF Rank #1 (Strong Buy) and has a High risk outlook (read: Biotech ETFs Surge on Biogen's Positive Drug Trial Result).

 

First Trust Amex Biotechnology Index (FBT)

 

It tracks the equal-weighted NYSE Arca Biotechnology Index. There are 30 holdings in the basket with FBT holding 12.9%. The AUM is $2.16 billion, while expense ratio is 0.56%. The fund has a Zacks ETF Rank #2 (Buy) with a High risk outlook.

 

iShares Evolved U.S. Innovative Healthcare ETF(IEIH)

 

This is an actively managed fund, with a pool of 198 holdings. The companies mentioned here hold a 16.92% aggregate weight. The fund has AUM of $5.30 million and expense ratio of 0.18%

 

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The biotech sector has been performing remarkably well driven by a wave of mergers & acquisitions, new tax legislation, and a positive regulatory backdrop. Strong Q2 earnings results have also added to the strength as most of the biotech giants such as Amgen Inc AMGN, Gilead Sciences GILD, Biogen Inc BIIB and Alexion Pharmaceuticals ALXN have topped the estimates on both earnings and revenues(read: Health Care ETFs)  

 

Earnings in Focus

 

Amgen reported second-quarter earnings per share of $3.83, which beat the Zacks Consensus Estimate of $3.52 and improved from the year-ago earnings of $3.27. Revenues of $6.06 billion also came ahead of the estimated $5.72 billion and were up from $5.81 billion reported in the year-ago quarter.

 

Amgen raised its sales and earnings guidance for 2018. Better-than-expected second-quarter results and an optimistic outlook for the rest of the year led to the increase in earnings guidance.

 

The company now expects its revenues in the range of $22.5-$23.2 billion compared with the previous prediction of $21.9-$22.8 billion. Adjusted earnings are now anticipated in the range of $13.30-$14.00 in 2018 compared with the previous projection $12.80-$13.70.

 

Gilead Sciences beat the earnings estimate by 28 cents and but 76 cents lower than the year-ago quarter. The revenue estimates were beaten by $470 million but $1493 million below the year-ago quarter.

 

Gilead continues to expect net product sales in the range of $20-$21 billion. The company raised its diluted, adjusted EPS guidance range to $1.50-$1.60 per share from the previously announced $1.41-$1.51.

 

Biogen reported a positive surprise of 11.11% on earnings and 3.3% on revenues. Earnings improved year over year by 15.08% and revenues by 9.06%.

 

Biogen raised its revenue expectations for the full year in the range of $13-$13.2 billion from the previous expectation of $12.7-$13 billion. The company also increased its earnings expectation from $24.20-$25.20 per share to $24.90-$25.50.

 

Alexion Pharmaceuticals beat the Zacks Consensus Estimate on earnings by 39 cents and showed a year-over-year improvement of 43.51%.Revenues also topped by the estimated $63 million and marks a year-over-year improvement of 14.59%.

 

The company raised its earnings per share and revenue guidance for 2018. It expects earnings per share in the range of $7.00-$7.15, up from the previous forecast of $6.75-$6.90. Alexion projects revenues to be in the band of $3.98-$4.01 billion, up from its previous expectation of $3.93-$3.99 billion.

 

The earnings boost has pushed the biotech ETFs higher over the past one month. Below, we have highlighted the four most-popular ETFs with high exposure to the above-mentioned companies. 

 

iShares Nasdaq Biotechnology ETF IBB)

 

This fund tracks the NASDAQ biotechnology index. The fund has 191 holdings with 28.78% weightage to the mentioned four companies. It has an AUM of $9.25 billion and an expense ratio of 0.47%.The fund has gained 1.52% over a one-month period. It has a Zacks ETF Rank of #3 (Hold) with a High risk outlook (read:What investors need to know about Biotech ETFs).


VanEck Vectors Biotech ETF (BBH)

 

The fund tracks the MVIS US Listed Biotech 25 Index. It has a pool of 25 stocks with 28.78% the weightage of the mentioned four companies. It has an AUM of $472.3 million and an expense ratio 0.35%.The fund has gained 3.52% over a one-month period. It sports a Zacks ETF Rank #1 (Strong Buy) and has a High risk outlook (read:Biotech ETFs Surge on Biogen's Positive Drug Trial Result).

 

First Trust Amex Biotechnology Index (FBT)

 

It tracks the equal-weighted NYSE Arca Biotechnology Index. There are 30 holdings in the basket with FBT holding 12.9%. The AUM is $2.16 billion, while expense ratio is 0.56%. The fund has a Zacks ETF Rank #2 (Buy) with a High risk outlook.

 

iShares Evolved U.S. Innovative Healthcare ETF(IEIH)

 

This is an actively managed fund, with a pool of 198 holdings. The companies mentioned here hold a 16.92% aggregate weight. The fund has AUM of $5.30 million and expense ratio of 0.18%

 

Want key ETF info delivered straight to your inbox?

 

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>

 


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ISHARES NDQ BIO (IBB): ETF Research Reports
 
FT-AMEX BIOTEC (FBT): 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
 
ISHR-EUS INV HC (IEIH): ETF Research Reports
 
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