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Biotech ETFs in Focus on String of Q3 Earnings Beat

Zacks Equity Research
Updated
Disney ETFs could experience some positive pricing action post strong Q4 results.

Though the biotech sector is down in October, it shows promise for the long term due to a wave of mergers & acquisitions 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  barring Alexion Pharmaceuticals, which missed on revenue estimates slightly (read: Health Care ETFs). 

Earnings in Focus

Amgen reported third-quarter earnings per share of $3.69, which beat the Zacks Consensus Estimate of $3.42 and improved from the year-ago earnings of $3.27. Revenues of $5.9 billion also came ahead of the estimated $5.8 billion and were up from $5.8 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 revenues in the range of $23.2-23.5 billion compared with the previous prediction of $22.5-$23.2 billion. Adjusted earnings are now anticipated in the range of $14.00-$14.25 in 2018 compared with the previous projection $13.30-$14.00 (read: Amazon Slumps Nearly 14% in the Last 2 Days: ETFs in Focus).

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Gilead Sciences beat earnings estimates by 14 cents and but came in 53 cents lower than the year-ago quarter. The revenue estimates were beaten by $160 million. Year-ago quarter revenues were reported at $6.51 billion.

Gilead expects net product sales of $20.8-$21.3 billion compared with the earlier estimate of $20-$21 billion (read: Gold Mining ETFs Slide on Dull Earnings).

Alexion Pharmaceuticals beat the Zacks Consensus Estimate on earnings by 27 cents and showed a year-over-year improvement of 45.3%. Revenues missed the estimate narrowly by $1 million and but saw a year-over-year improvement of 19.6%.

The company raised its earnings per share and revenue guidance for 2018. It expects earnings per share to be $7.45-$7.60, up from the previous forecast of $7.00-$7.15. Alexion projects revenues of $4.02-$4.05 billion, up from its previous expectation of $3.98-$4.01 billion

Biogen reported a positive surprise of 8.8% on earnings and 3.3% on revenues. Earnings improved year over year by 17.3% and revenues grew by 2.4%.

Biotech ETFs, iShares Nasdaq Biotechnology ETFIBB, VanEck Vectors Biotech ETF(BBH) andFirst Trust Amex Biotechnology Index(FBT) have dipped in the last 4 trading days—period dotted with biotech releases by 0.8%, 2% and 1.7% respectively (as of Oct 30). Below, we have highlighted the four most-popular ETFs with high exposure to the above-mentioned companies:

 IBB

This fund tracks the NASDAQ biotechnology index. It has 191 holdings with 29.11% weight age to the mentioned four companies. It has an AUM of $8.6 billion and an expense ratio of 0.47%. Year-to-date loss is 3.6%.

BBH

The fund tracks the MVIS US Listed Biotech 25 Index. It has a pool of 25 stocks with 25.19% weight to the mentioned four companies. It has an AUM of $432.2 million and an expense ratio 0.35%. Year to date loss is 6.8%.  

FBT

It tracks the equal-weighted NYSE Arca Biotechnology Index. There are 30 holdings in the basket with FBT holding 12.9%. AUM is $3.18 billion, while expense ratio is 0.56%. Year-to-date return is 4.7%.  

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VANECK-BIOTECH (BBH): ETF Research Reports
 
ISHARES NDQ BIO (IBB): ETF Research Reports
 
FT-AMEX BIOTEC (FBT): ETF Research Reports
 
Alexion Pharmaceuticals, Inc. (ALXN) : Free Stock Analysis Report
 
Amgen Inc. (AMGN) : Free Stock Analysis Report
 
Biogen Inc. (BIIB) : Free Stock Analysis Report
 
Gilead Sciences, Inc. (GILD) : Free Stock Analysis Report
 
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Zacks Investment Research
 
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