ETFs
A look at pharmaceutical ETFs after first quarter results
The healthcare sector’s first quarter results have not been impressive, with 78% of industry players reporting profits so far down 31.2% despite revenue growth of 4.4%. %. The earnings overrun ratio of 93.9% and revenue overrun ratio of 75.8% are reassuring, however. Combining actual results with estimates for companies that have not yet reported, total industry profits are expected to decline by 25.1% despite revenue growth of 7.1%.
However, many industry bigwigs reported strong results, with some weakening profits, revenues, or both. Thus, pharmaceutical ETFs have delivered mixed performance over the past month. iShares US Pharmaceuticals ETF IHE, VanEck Vectors Pharmaceutical ETF HPP, SPDR S&P Pharmaceutical ETF XPH and First Trust Nasdaq Pharmaceuticals ETF FTXH lost 3.7%, 1.9%, 2.9% and 3.1% respectively, while Invesco Pharmaceuticals ETF PJP added 0.8% in one month.
Let’s take a closer look at the earnings of some of the bigwigs:
Focus on profits
Johnson and Johnson
Johnson & Johnson JNJ continued its long streak of earnings beating revenue estimates, but fell behind. Earnings per share came in at $2.71, beating the Zacks Consensus Estimate of $2.64 and improving 12.4% from the year-ago quarter. Revenue increased 2% year over year to $21.38 billion and fell short of the Zacks Consensus Estimate of $21.4 billion. For 2024, Johnson & Johnson revised its forecast from $88.2 billion to $89.0 billion to $87.8 billion to $88.6 billion, indicating year-over-year growth of 5.5 to 6 .0%. Adjusted earnings per share forecasts were tightened from $10.55 to $10.75 to $10.57 to $10.72 (read: JNJ Beats Q1 Profit Estimates, Missed Selling: Featured ETFs ).
Pfizer
Pfizer (PFE) beat estimates on both revenue and earnings. It reported adjusted earnings per share of 82 cents, which beat the Zacks Consensus Estimate of 56 cents per share, but declined 33% year over year. Revenue fell 20% year over year to $14.88 billion and remained below the consensus mark of $13.96 billion. The US pharmaceutical giant reaffirmed its revenue forecast of $58.5 billion to $61.5 billion and increased its 2024 adjusted earnings per share of $2.05 to $2.25 from $2.15 to $2.35. .
Merck
Merck MRK also beat earnings and revenue estimates. It posted earnings per share of $2.07, which beat the Zacks Consensus Estimate of $1.94 and increased 48% from last year’s earnings. Revenue rose 9% year over year to $15.78 billion and surpassed the consensus mark of $15.37 billion. Merck raised the lower end of its revenue forecast. It now expects revenue between $63.1 billion and $64.2 billion, up from $62.7 billion to $64.2 billion, while earnings per share are expected between $8.53 billion and $8.65 , compared to a previous expectation of $8.44 to $8.59.
Bristol-Myers
Bristol-Myers BMY also reported better-than-expected results. It reported a loss per share of $4.40, below the Zacks Consensus Estimate of a loss of $4.53 per share. In the year-ago quarter, BMY posted adjusted earnings per share of $2.05. Revenues increased 5% year over year to $11.86 billion and surpassed the Zacks Consensus Estimate of $11.46 billion. For 2024, Bristol-Myers expects revenue to grow in the low-single-digit range, while earnings per share are expected to be between 40 cents and 70 cents, down from the previous estimate of 7 .10 to $7.40, to reflect the dilutive impact of recent acquisitions and collaborations.
Eli Lilly and company
Eli Lilly and Company LLY reported mixed first-quarter 2024 results, beating earnings estimates but lagging revenue. Earnings per share came in at $2.58, beating the Zacks Consensus Estimate of $2.53 and improving 59% from a year ago. Revenue rose 26% to $8.77 billion, but fell short of the $8.81 billion estimate. Eli Lilly raised its 2024 revenue forecast from $40.4-41.6 billion to $42.4-43.6 billion, while adjusted earnings per share forecast was raised to $13.50- $14.00 versus previous projection of $12.20-12.70 (read: ETF to Buy as Eli Lilly Beats Q1 Earnings, Outlook Improves).
The story continues
Angle ETF
iShares US Pharmaceuticals ETF (IHE)
The iShares US Pharmaceuticals ETF provides exposure to 34 US companies that manufacture prescription or over-the-counter drugs or vaccines by tracking the Dow Jones US Select Pharmaceuticals Index. The five targeted companies make up the largest holdings in the basket, representing a combined 59% of total assets, suggesting high concentration. The iShares US Pharmaceuticals ETF has $654.8 million in assets under management and charges 40 basis points in fees and expenses. It carries a Zacks ETF Rank #2 (Buy) with a High Risk outlook.
VanEck Vectors Pharmaceutical ETF (PPH)
The VanEck Vectors Pharmaceutical ETF tracks the MVIS US Listed Pharmaceutical 25 Index and holds 26 stocks in its basket. The five companies collectively represent a 33.2% share of the fund’s basket. The product has accumulated $512.7 million in its asset base and charges 36 basis points in annual fees. The VanEck Vectors Pharmaceutical ETF carries a Zacks ETF Rank #3 (Hold) with a Medium Risk Outlook (see: all healthcare ETFs here).
SPDR S&P Pharmaceuticals ETF (XPH)
The SPDR S&P Pharmaceuticals ETF provides exposure to pharmaceutical companies by tracking the S&P Pharmaceuticals Select Industry Index. With assets under management of $197.9 million, it holds 41 securities, with the targeted companies each representing approximately 4% of the shares. The SPDR S&P Pharmaceuticals ETF charges 35 basis points in fees per year and has a Zacks ETF Rank #3 with a High Risk Outlook.
Invesco Pharmaceuticals ETF (PJP)
Invesco Pharmaceuticals ETF provides exposure to companies primarily engaged in the research, development, manufacture, sale or distribution of pharmaceuticals and medicines of all types. It tracks the Dynamic Pharmaceuticals Intellidex Index and holds 24 stocks in its basket, with targeted companies each representing at least 5% of the shares. The Invesco Pharmaceuticals ETF has approximately $270.2 million in assets under management and charges 57 basis points in fees and expenses. The ETF has a Zacks ETF Rank #3 with a High Risk outlook.
First Trust Nasdaq Pharmaceuticals ETF (FTXH)
The First Trust Nasdaq Pharmaceuticals ETF tracks the Nasdaq US Smart Pharmaceuticals Index, holding 50 stocks in its basket. The five targeted companies represent a total of 32.2% of assets. FTXH has assets under management of $19.9 million. The First Trust Nasdaq Pharmaceuticals ETF charges 60 basis points in annual fees and has a Zacks ETF Rank #2 (Buy).
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Bristol Myers Squibb Company (BMY): Free Stock Analysis Report
Johnson & Johnson (JNJ): Free Stock Analysis Report
Merck & Co., Inc. (MRK): Free Stock Analysis Report
Eli Lilly and Company (LLY): Free Stock Analysis Report
Invesco Pharmaceuticals ETF (PJP): ETF Research Reports
iShares US Pharmaceuticals ETF (IHE): ETF Research Reports
SPDR S&P Pharmaceuticals ETF (XPH): ETF Research Reports
VanEck Pharmaceutical ETF (PPH): ETF Research Reports
First Trust NASDAQ Pharmaceuticals ETF (FTXH): ETF Research Reports