Healthcare ETFs Set To Soar As Q3 Earnings Unfold

Thanks to encouraging industry trends and hopes of a favorable policy environment, healthcare is one of the top-performing sectors this year. Notably, popular ETFs like Health Care Select Sector SPDR Fund (XLV – Free Report), Vanguard Health Care ETF (VHT – Free Report), iShares U.S. Healthcare ETF (IYH- Free Report) and Fidelity MSCI Health Care Index ETF (FHLC – Free Report) have gained at least 23% so far.

The bullish trend is likely to continue heading into the Q3 earnings season as some big names like Pfizer (PFE – Free Report) , Merck (MRK – Free Report), Amgen (AMGN – Free Report), AbbVie (ABBV – Free Report), Gilead Sciences (GILD – Free Report) and Bristol-Myers Squibb (BMY – Free Report) are lined up to report this week and in the next. All these stocks collectively account for 27.6% share in XLV, 26.5% in IYH, 24.2% in VHT and 24% in FHLC.

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

According to our methodology, a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), when combined with a positive Earnings ESP increases our chances of predicting an earnings beat, while a Zacks Rank #4 or 5 (Sell-rated) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Inside Our Surprise Prediction of These Stocks

Pfizer has a Zacks Rank #3 and an Earnings ESP of +0.94%, indicating a reasonable chance of beating estimates this quarter. The stock has seen no earnings estimate revision for the yet-to-be-reported quarter but delivered an average negative earnings surprise of 0.39% for the past four quarters. It has an impressive Value Style Score of B but a Growth and Momentum Style Score of C and F, respectively, looks disappointing. Pfizer is scheduled to report earnings on Oct 31 before the opening bell.