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Drug/Biotech Q1 Earnings Lineup on May 8: JAZZ, ARNA & More

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The first-quarter earnings season has been relatively strong. However, the stock market’s recent performance is yet to reflect the strength. While positive revisions were seen ahead of the start of the Q1 earnings season, the estimate revision trend for the second quarter has been rather underwhelming.

As of May 4, 2018, 409 S&P 500 members reported results, according to the latest Earnings Preview.

Total earnings of these 409 index members increased 24% from the year-ago quarter on a 9.3% improvement in revenues. The beat ratio was 78% for earnings and 75.6% for revenues.

Per the report, first-quarter earnings of the S&P 500 companies (combining the actual results that have come out with estimates for the still-to-come companies) are expected to grow 23.2% year over year on 8.7% higher revenues.

Please note that the broader Medical sector (includes drug, biotech as well as Medical Device companies) is expected to record year-over-year growth of 7.1% in revenues and 13.6% in earnings in Q1.

The pharma bigwigs that reported last week included Pfizer PFE, Merck MRK and Allergan AGN. Merck and Pfizer beat estimates for earnings but missed the same for sales. While Pfizer re-affirmed its previously issued guidance for 2018, Merck raised its outlook for both earnings and sales. Both the companies witnessed a relatively weaker top-line performance in the quarter. Allergan beat estimates for both earnings and revenues in the first quarter of 2018 and raised its 2018 guidance for both earnings and sales.

Among the big biotechs, Celgene Corporation beat estimates for earnings as well as sales and raised its earnings expectations for the full year. Gilead’s earnings and sales missed estimates on wider-than-expected decline in HCV franchise.

Here we have four small biotech/pharma companies that are set to report first-quarter results on May 8. Let's see how things are shaping up for these announcements.

Jazz Pharmaceuticals plc JAZZ

Jazz Pharmaceuticals is scheduled to announce results after market close. Of late, the company’s earnings performance has been disappointing. The company surpassed estimates only once in the last four quarters, missing the same in the other three with an average beat of 0.79%. Last quarter, the company delivered a negative surprise of 1.01%.

However, the company has an Earnings ESP of +1.33% and a Zacks Rank #3 (Hold), indicating a likely positive surprise. The Zacks Consensus Estimate is pegged at $2.76 per share. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Our previous article showed that Jazz was unlikely to beat on earnings this quarter. However, estimates changed thereafter and we are now more confident of a likely positive surprise this earnings season.

On the call, investors will be keen to know how Xyrem, Jazz’s lead product for cataplexy and excessive daytime sleepiness (EDS), has performed. Also, they will be keen to know about the company’s pipeline progress. Its business development plans are also expected to draw notice. (Read more: Jazz Pharmaceuticals Q1 Earnings: What's in Store?)

Arena Pharmaceuticals, Inc. ARNA

Arena is also expected to report after market close

Arena’s earnings performance has been a mixed bag over the trailing four quarters. While the company surpassed expectations in two of the last four quarters, it missed the same on the other two occasions, delivering an average positive beat of 5.10%.

In the last reported quarter, the company outpaced the Zacks Consensus Estimate, delivering positive earnings surprise of 44.62%.

Sales of Arena’s obesity treatment drug, Belviq, the only approved product in Arena’s portfolio, are not expected to be any better. Arena has a few pipeline candidates and updates on the same are expected on the first-quarter conference call. (Read more: What's in the Cards for Arena This Earnings Season?)

The company has an Earnings ESP of 0.00% and a Zacks Rank #3. The Zacks Consensus Estimate for the first quarter is pegged at a loss of 70 cents per share.

Ligand Pharmaceuticals Incorporated LGND

Ligand is scheduled to announce results after market close.

Ligand’s stellar earnings history shows an estimate beat in three of the last four quarters. The company missed the consensus mark only once. It also delivered an average positive earnings surprise of 24.88%.

In the last reported quarter, Ligand pulled off a positive surprise of 23.58%.

The company has an Earnings ESP of 0.00% and a Zacks Rank #1. The Zacks Consensus Estimate for the soon-to-be reported quarter is pegged at $1.28 per share.

On the first-quarter conference call, we expect investor focus to remain on the company’s updates regarding partnerships as well as its major pipeline assets. (Read more: What Lies Ahead for Ligand This Earnings Season?)

Valeant Pharmaceuticals International, Inc. VRX

Valeant, which is scheduled to release earnings before market opens, delivered a negative earnings surprise of 1.01% last quarter. Valeant’s earnings performance has been decent with earnings missing expectations in one of the last four quarters while beating the same in the remaining three, bringing the average positive surprise to 53.62%.

For this quarter, Valeant has an Earnings ESP of -16.33% and a Zacks Rank #3. The Zacks Consensus Estimate is pegged at 66 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Here is how these four stocks performed this year so far:

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Pfizer Inc. (PFE) : Free Stock Analysis Report
Allergan plc (AGN) : Free Stock Analysis Report
Merck & Co., Inc. (MRK) : Free Stock Analysis Report
Arena Pharmaceuticals, Inc. (ARNA) : Free Stock Analysis Report
Ligand Pharmaceuticals Incorporated (LGND) : Free Stock Analysis Report
Valeant Pharmaceuticals International, Inc. (VRX) : Free Stock Analysis Report
Jazz Pharmaceuticals PLC (JAZZ) : Free Stock Analysis Report
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