Drug Stocks' Earnings To Watch On Aug 5: PETX, DVAX & More

How does the earnings picture look like as we near the tail end of the second-quarter reporting cycle? Actual Q2 results are turning out to be less ominous than what was expected. With 73.5% (as of Jul 29) of the S&P 500 members having already reported results, this trend is expected to continue through the end of the earnings season. Of the 317 S&P 500 companies that have reported as of Jul 29, 72.9% topped earnings expectations while 53.6% surpassed revenue estimates.

Notwithstanding this “modest improvement,” growth still remains elusive and Q2 is headed to be the fifth quarter in a row to record an earnings decline for the S&P 500 index.

Now with several pharma and major biotech companies having released their earnings results, it is clear that Medical is one of the few sectors witnessing earnings and revenue growth this season. Our Q2 scorecard shows that 63.5% of the Medical sector have reported results with a blended beat of 75.8% (the percentage of companies that have beaten both EPS as well as revenue estimates) with the sector recording 5.4% earnings growth on revenue growth of 10.5%.

Per our Earnings Trends report, Medical is one of the six sectors expected to record earnings growth in Q2.

This is also corroborated by the second-quarter performance of some well-known names in the Medical sector. Companies like Johnson & Johnson (NYSE:JNJ) , Novartis, Abbott, Biogen (NASDAQ:BIIB), Amgen (NASDAQ:AMGN), AbbVie, Bristol-Myers, and Celgene (NASDAQ:CELG) have surpassed expectations, and some among these even raised their outlook for the year. However, the biggest drag was biotech major Gilead Sciences Inc.’s (NASDAQ:GILD) results. The company barely managed to beat earnings by a penny and even cut its product sales guidance for the year.

Still, several mid- and small-sized pharma and biotech companies are yet to report Q2 results. Let’s take a sneak peek at four such companies.

Will these Drug Stocks Pull a Surprise?

Pet therapeutics company, Aratana Therapeutics, Inc. (NASDAQ:PETX) is focused on licensing, developing and commercializing innovative biopharmaceutical products for companion animals. This Leawood, KS-based company has a decent track record. The company has beaten estimates in three of the last four quarters with an average positive surprise of 10.69%. Aratana currently carries a Zacks Rank #3. The stock’s Zacks Rank #3 when combined with an Earnings ESP of 0.00% makes surprise prediction uncertain. The company will report second-quarter results on Aug 5.

Headquartered in Berkeley, CA, Dynavax Technologies Corporation (NASDAQ:DVAX) is a biopharmaceutical company focused on the discovery and development of vaccines and therapeutics. Dynavax’s track record so far has been mixed with the company surpassing expectations on two occasions, while missing estimates in the other two. Overall, the company has delivered a negative surprise of 4.19%. This Zacks Rank #3 (Hold) stock also has an ESP of 0.00% making a surprise prediction difficult this quarter. The company is expected to release Q2 results on Aug 5.

Based in Redwood City, CA, Heron Therapeutics, Inc. (NASDAQ:HRTX) is a biotechnology company focused on the development of novel, patient-focused solutions that apply its innovative science and technologies to already-approved pharmacological agents for patients suffering from cancer or pain. Heron’s track record has also been mixed with the company surpassing expectations on two occasions, while missing the same on the other two. Heron currently has a Zacks Rank #4 (Sell) and an ESP of +3.13%. As it is, we caution against Sell-rated stocks (#4 or #5) going into an earnings announcement.The company is expected to release Q2 results on Aug 5.

San Diego, CA-based La Jolla Pharmaceutical Co. (NASDAQ:LJPC) is a biopharmaceutical company focused on the discovery, development and commercialization of innovative treatments for patients suffering from life-threatening diseases. La Jolla’s performance has been mostly disappointing with the company missing expectations in three of the last four quarters with an average negative surprise of 9.18%. Though the stock’s Zacks Rank #3 increases the predictive power of the ESP, it also has an ESP of 0.00%, making a surprise prediction uncertain this quarter. The company is expected to report second-quarter results on Aug 5.