The healthcare sector has performed well in recent months, driven by the booming weight-loss drug treatment segment. Its non-cyclical nature, which provides a cushion to the portfolio in times of economic or political turmoil, also added to the strength.
As such, 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 are up around 2% each over the past three months.
Further price movement of these funds depends on earnings releases from some big names like Pfizer (PFE), Merck (MRK), Amgen (AMGN), AbbVie (ABBV), Bristol Myers Squibb (BMY) and Eli Lilly (LLY) that dominate returns. These firms are lined up to report their earnings in the next two weeks. All these stocks collectively account for a 31.8% share in XLV, 30.8% in IYH, 27.9% in FHLC and 26.7% in VHT (see: all the Healthcare ETFs here).
Let’s dig deeper into the earnings picture of these companies, which will drive the performance of the abovementioned 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 an Earnings ESP of +2.68% and a Zacks Rank #3. The stock witnessed a positive earnings estimate revision of a couple of cents for the to-be-reported quarter over the past seven days. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. Pfizer delivered an earnings surprise of 69.82%, on average, in the past four quarters. Pfizer is scheduled to report earnings on Oct. 29, before the opening bell.
Merck is slated to report results on Oct. 31, before market open. It has an Earnings ESP of -2.32% and a Zacks Rank #3. The stock witnessed a negative earnings estimate revision of five cents over the past seven days for the to-be-reported quarter. Additionally, Merck delivered a four-quarter beat of 38.85%, on average.
Amgen has an Earnings ESP of -1.07% and carries a Zacks Rank #3. It witnessed a negative earnings estimate revision of a couple of cents over the past 30 days for the quarter to be reported. The earnings surprise track over the past four quarters is strong, with the average beat being 3.47%. Amgen will report earnings on Oct. 30.
AbbVie has an Earnings ESP of -0.28% and a Zacks Rank #3. It saw a negative earnings estimate revision of a penny over the past seven days for the to-be-reported quarter. The company delivered an earnings surprise of 2.39%, on average, in the last four quarters. The company is scheduled to report on Oct. 30 before the opening bell (read: ETFs in Focus Post JNJ Q3 Earnings Beat, Target Price Hike).
Bristol-Myers will report earnings on Oct. 31 before the opening bell. It has an Earnings ESP of -2.24% and a Zacks Rank #3. The stock witnessed a positive earnings estimate revision of a couple of cents for the to-be-reported quarter over the past seven days. The stock delivered an earnings surprise of 13.75%, on average, over the past four quarters.
Eli Lilly is scheduled to release earnings on Oct. 30, before the opening bell. It has an Earnings ESP of 0.00% and a Zacks Rank #2. The stock saw a positive earnings estimate revision of $1.02 over the past seven days for the to-be-reported quarter. Eli Lilly delivered an earnings surprise of 69.07%, on average, over the last four quarters.
Summing Up
With some companies witnessing positive earnings estimate revisions, the healthcare sector is expected to come up with strong results. The sector is expected to see earnings growth of 3.5% in the third quarter, per the Earnings Trend report. XLV and VHT have a Zacks ETF Rank #1 each, while IYH has a Zacks ETF Rank #2. FHLC has a Zacks ETF Rank #3.
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Health Care Select Sector SPDR ETF (XLV): ETF Research Reports
iShares U.S. Healthcare ETF (IYH): ETF Research Reports
Vanguard Health Care ETF (VHT): ETF Research Reports
Fidelity MSCI Health Care Index ETF (FHLC): ETF Research Reports
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