Earnings season for the biotech and pharma sector has not exactly started on a positive note with industry bellwether Johnson & Johnson JNJ reporting mixed first quarter results. While earnings surpassed expectations, revenues missed (Read more: J&J Q1 Earnings Beat Estimates, Pharma Sales Slow Down). A key cause for concern was the performance of the pharma segment as well as the consumer healthcare segment which has given rise to concerns in the investment community about what to expect from other drug stocks.
Historically, the first quarter has usually been a slow one for pharma and biotech companies for reasons like inventory destocking, fewer shipping days and the Medicare donut hole. Higher discounting in managed care and government channels for preferred access physicians, lower prices for certain drugs, softer scrip growth in the U.S., and higher sales occurring in the Medicaid channel are some of the factors that could affect drug sales of pharma and biotech companies. Q1 results will also be impacted by currency headwinds.
With concerns increasing about how the rest of the sector will perform, it would make sense to avoid drug companies that are sell ranked stocks and have a negative Earnings ESP.
Valeant Pharmaceuticals International, Inc. VRX: Canada-based specialty pharma company, Valeant, has been in the headlines over the last few quarters related to the drug pricing controversy as well as its performance. The Zacks Rank #5 (Strong Sell) stock, which missed earnings expectations in three of the last four quarters, has a negative earnings ESP of 13.86% for the first quarter of 2017. The company, which has a presence in the dermatology, gastrointestinal disorders, eye health, neurology and branded generics markets, will be reporting results on May 9.
Earnings estimates for the first quarter are down 2% over the last 30 days. Year-to-date (YTD), Valeant’s shares are down 37.7%, lagging the Zacks-categorized Medical-Drugs industry which gained 0.2% during this period.
Bio-Techne Corporation TECH: Global life sciences company Bio-Techne provides innovative tools and bioactive reagents for the research and clinical diagnostic communities. The Zacks Rank #4 (Sell) stock, which missed earnings as well as revenue expectations in the second quarter of fiscal 2017, has a negative earnings ESP of 3.45% for the third quarter of fiscal 2017. Earnings estimates for the March quarter and fiscal 2017 are down 1.1% and 0.3%, respectively, over the last 30 days.
YTD, the company’s shares are down 1%, lagging the Zacks-categorized Medical-Biomedical/Genetics industry which is up 1.9%. Bio-Techne will be reporting third quarter fiscal 2017 results on May 2, 2017.
Dicerna Pharmaceuticals, Inc. DRNA: Cambridge, MA-based Dicerna is focused on the discovery and development of subcutaneously delivered RNAi-based pharmaceuticals using its GalXCTM RNAi platform for the treatment of diseases involving the liver, including rare diseases, chronic liver diseases, cardiovascular diseases and viral infectious diseases. Dicerna, which is expected to report first quarter 2017 results on May 8, has a negative earnings ESP of 3.08%. Dicerna is a Zacks Rank #4 stock.
Voyager Therapeutics VYGR: Clinical-stage gene therapy company, Voyager, is focused on developing treatments for severe diseases of the central nervous system (CNS). The Zacks Rank #4 stock has a negative earnings ESP of 9.26% for the first quarter of 2017. Voyager’s fourth quarter 2016 results lagged estimates.
YTD, Voyager has underperformed the Zacks-categorized Medical-Generic Drugs industry with shares declining 8.9% compared to the industry decline of 4.9%. Loss estimates for the first quarter and 2017 are up 8% and 15.5%, respectively, over the last 30 days. Voyager is expected to report first quarter results on May 11.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here and also uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
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Johnson & Johnson (JNJ): Free Stock Analysis Report
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