Healthcare to Post Solid Q3 Earnings Growth: ETFs in Focus

Sweta Killa

22 October 2020 at 10:15 am·5-min read

Although the healthcare sector has lately been hit by the news that Johnson and Johnson JNJ and Eli Lilly LLY have halted their trials for the novel disease vaccine over safety concerns, it is expected to witness the second-highest earnings growth this earnings season.

The ultra-popular ETFs, Health Care Select Sector SPDR Fund XLV, Vanguard Health Care ETF VHT, iShares U.S. Healthcare ETF IYH and Fidelity MSCI Health Care Index ETF FHLC, have gained around 1% in the past three months (read: JNJ Beats Q3 Earnings, Lifts Outlook: Healthcare ETFs in Focus).

The price movement of the fund depends on earnings releases of some big names like Pfizer PFE, Merck MRK, Amgen AMGN, AbbVie ABBV, Gilead Sciences GILD and Bristol-Myers Squibb BMY that dominate returns. These firms are lined up to report their earnings in the coming weeks. All these stocks collectively account for 22.6% share in XLV, 20.4% in IYH, 19.6% in VHT and 19.4% in FHLC.

Let’s dig deeper into the earnings picture of these companies, which will drive the performance of the above-mentioned funds in the coming days:

According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Inside Our Surprise Prediction for These Stocks

Pfizer has a Zacks Rank #3 and an Earnings ESP of -0.12%. The stock witnessed negative earnings estimate revision of a couple of cents for the to-be-reported quarter over the past 30 days. It delivered earnings surprise of 12.53%, on average, in the past four quarters and has a Value Score of B. Pfizer is scheduled to report earnings on Oct 27, before the opening bell.

Merck is expected to report results on Oct 27 before market open. It has a Zacks Rank #3 and an Earnings ESP of +2.60%. The stock witnessed negative earnings estimate revision of a penny over the past 30 days for the to-be-reported quarter. Additionally, the stock delivered an average beat of 12.66% in the last four quarters. Merck has a VGM Score of A (see: all the Healthcare ETFs here).

Amgen carries a Zacks Rank #3 and has an Earnings ESP of +0.01%. It has witnessed positive earnings estimate revision of a penny over the past 30 days for the quarter to be reported. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. The earnings surprise track over the past four quarters is strong, with the beat being 8.58%, on average. The stock has a VGM Score of A. Amgen will report earnings on Oct 28.

AbbVie has a Zacks Rank #3 and an Earnings ESP of -0.97%. The company delivered earnings surprise of 3.32%, on average, in the last four quarters. It saw negative earnings estimate revision of a penny over the past month for the to-be-reported quarter. The stock has a top Value Score of A. The company is scheduled to report on Oct 30 before the opening bell.

Gilead is expected to release earnings on Oct 28 after market close. It has a Zacks Rank #3 and an Earnings ESP of 0.00%. The stock saw negative earnings estimate revision of 3 cents over the past month for the to-be-reported quarter. Gilead’s negative earnings surprise was 10.21%, on average, over the last four quarters. Gilead has a VGM Score of A.

Bristol-Myers will likely report earnings on Nov 5 before the opening bell. It has a Zacks Rank #3 and an Earnings ESP of +1.01%. The stock delivered an earnings surprise of 8.02%, on average, over the past four quarters, but saw negative earnings estimate revision of a penny for the to-be-reported quarter in a month. It has a VGM Score of A (read: Healthcare ETFs Pop on Bristol Myers-MyoKardia Deal).

Summing Up

The healthcare sector is expected to witness substantial earnings growth of 5.1% in the third quarter, representing the second strongest sector this earnings season. In particular, FHLC has a Zacks ETF Rank #3 while the remaining three have a Zacks ETF Rank #2.

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 >>

Malay Mail
Bank staff union lodges police report against HR Minister Sim, claiming interference over Raya aid
KUALA LUMPUR, April 19 — The National Union of Bank Employees (Nube) said today five police reports were lodged on behal...
1d ago
Malay Mail
Young millionaires on the rise in Malaysia, 75pc jump recorded in 2022
KUALA LUMPUR, April 20 — Malaysia reportedly recorded a 75 per cent increase in young millionaires in 2022, the Inland R...
6h ago
The Independent
‘This is England’: Train passengers horrified as man launches into racist tirade in packed carriage
Passengers on service said they were abused by group on train after men got on at London Bridge
19h ago
Cinema Online
Kathy Chow to be laid to rest in Beijing
The actress' family says that Beijing has a special place in Kathy's heart
1d ago
People
Kourtney Kardashian Celebrates Her Appearance After Fan Comments on Bikini Pic: 'I Love This Body'
The Lemme co-founder is thankful for her body because it "gave me my 3 big babies and my little baby"
1d ago
The Telegraph
Israel has just handed Iran a major victory
What is the point of retaliation? Not revenge, for that is no way to conduct serious foreign policy. Not domestic politics, for drumming up popular support is not a reason to send a nation’s sons into action. No, the point is security. The point is to create a deterrent.
1d ago
The Telegraph
Ukraine’s frontline is collapsing – and Britain may soon be at war
While Western eyes are fixed on Tehran and Tel Aviv, Ukraine’s frontlines are showing clear signs of crumbling. There is a very real possibility they could crumble this summer if we do not throw the kitchen sink at Russia. Even if we do, it may already be too late for the weapons and munitions long promised by the West to save the day.
2d ago
Cinema Online
Sabri Yunus laughs off 57-year-old wife's pregnancy rumours
The comedian says that it was the funniest slander he has ever heard
1d ago
The Telegraph
Israel’s strike has exposed Iran’s fatal weakness
Israel’s presumed counterstrike against Iran has proved Joe Biden and David Cameron wrong in their insistence that Israel should just “take the win”. Instead, it fought back – and yesterday Iran was trying to pretend that nothing had happened.
16h ago
People
Royal Couple Announces Surprise Divorce After 13 Years of Marriage Weeks After Joint Appearance
The announcement comes after a recent joint outing with members of the British royal family
12h ago
The Daily Beast
Iran Issues Unprecedented Nuclear Threat in Duel With Israel
Reuters/Office of the Iranian Supreme Leader/WANAIran warned on Thursday that it might review its nuclear “doctrine,” threatening a potential break from the publicly stated “peaceful” objectives of its nuclear program.“The threats of the Zionist regime [Israel] against Iran's nuclear facilities make it possible to review our nuclear doctrine and deviate from our previous considerations,” said Ahmad Haghtalab, a top Iranian Revolutionary Guards commander, according to Tasnim. “If the Zionist regi
2d ago
Yahoo News
Dubai flooding: Dramatic photos after UAE sees heaviest rainfall in 75 years
The United Arab Emirates witnessed the heaviest rainfall in 75 years this week, triggering massive flooding that swept away cars, caused flights to be canceled and left multiple people dead.
2d ago
The Independent
Man who set himself on fire outside Trump trial posted conspiracy-laden manifesto online
Maxwell Azzarello, 37, dies in hospital after suffering burn injuries
3h ago
CNN
How a store manager from India ended up killed on the battlefields of Ukraine fighting for Russia
They opened the box on a Sunday in late March, getting their first look at Asfan Mohammed since he departed India for Russia four months earlier.
8h ago
Cinema Online
Moses Chan postpones plan to expand coffee business
The actor says that the economy is not right for him to take the risk
1d ago
AFP News
Pro-China PM retains his seat in Solomon Islands election
Solomon Islands Prime Minister Manasseh Sogavare was set Saturday to retain his seat in elections, local media reported, paving the way for the pro-China leader to try to form a government.Sogavare fended off four challengers to retain a parliamentary seat he has held for more than 20 years, according to provisional results reported by the nation's public broadcaster.
16h ago
CNN
Chaos in Dubai as UAE records heaviest rainfall in 75 years
Chaos ensued in the United Arab Emirates after the country witnessed the heaviest rainfall in 75 years, with some areas recording more than 250 mm of precipitation in fewer than 24 hours, the state’s media office said in a statement Wednesday.
2d ago
The Guardian
Jürgen Klopp defends Salah’s finishing after Liverpool exit Europa League
Jürgen Klopp said Liverpool squandered their Europa League chances at Anfield and insisted Mohamed Salah’s wastefulness was not the cause of their exit
1d ago
The Telegraph
The US Navy finally has an unmanned fifth generation carrier jet. The Topguns should unleash it
US aerospace firm Boeing is still hoping to weaponise the new MQ-25 Stingray drone it’s building for the US Navy’s aircraft carriers. Sure, there’s a profit motive. But Boeing isn’t wrong. Adding missiles to the far-flying MQ-25 – the Navy’s first in service carrier-capable drone – is a really good idea.
20h ago
People
Aimee Song Reveals Why She and Jacopo Moschin Decided to Marry After 10 Years Together: ‘Feels Official and Real’
“[A wedding] is just something I never thought about and now it has a bit of a different meaning to me,” Song shared in an interview with Brides
2d ago

Inside Our Surprise Prediction for These Stocks

Summing Up

Want key ETF info delivered straight to your inbox?

Latest stories