Q2 Earnings Drive Pharma ETFs Higher

Total earnings for 83.5% of the total healthcare market capitalization are up 13.7% on revenue growth of 7.8%. The growth rates seem unimpressive when compared with some of the other sectors. Earnings and revenue beat ratios of 91.9% and 83.8%, respectively, are also not great either.

Among the most notable players, Johnson & Johnson (JNJ – Free Report) was the first major drug company to report earnings on Jul 17, followed by Eli Lilly and Company (LLY – Free Report) and Bristol-Myers Squibb Company (BMY – Free Report) on Jul 24 and Jul 26, respectively. Other major U.S. drug companies — Merck (MRK- Free Report) and Pfizer (PFE – Free Report) — reported on Jul 27 and Jul 31, respectively. These industry bigwigs came up with solid results beating on both earnings and revenue estimates.

Earnings in Focus

Johnson and Johnson

The world’s biggest maker of healthcare products continued its long streak of earnings beat. Earnings per share came in at $2.10, four cents ahead of the Zacks Consensus Estimate and 14.8% higher than the year-ago quarter. Revenues grew 10.6% year over year to $20.83 billion and edged past the Zacks Consensus Estimate of $20.21 billion. However, Johnson & Johnson reduced its revenue guidance to $80.5-$81.3 billion from $81-$81.8 billion for 2018, citing a strong dollar. Further, it also narrowed the earnings per guidance range to $8.07-$8.17 from $8.00-$8.20.

Pfizer

Earnings per share of 81 cents came in 6 cents above the Zacks Consensus Estimate and revenues of $13.47 billion beat the estimated $13.26 billion. On an annual basis, earnings per share and revenues rose 21% and 4%, respectively. For 2018, the U.S. drug giant narrowed the revenue guidance range from $53.5-$55.5 billion to $53-$55 billion, while raised earnings per share guidance from $2.90-$3.00 to $2.95-$3.05.

Merck

Earnings per share came in at $1.06, surpassing the Zacks Consensus Estimate of $1.03 and improving 5% from the year-ago quarter. Revenues inched up 5% year over year to $10.46 billion and were above the estimated $10.31 billion. Merck also tightened its 2018 revenue guidance to $42-$42.8 billion from $41.8-$43.0 billion from $41.2-$42.7 billion while raised the earnings per share guidance to $4.22-$4.30 from $4.16-$4.28.