Drug Stocks To Watch For Earnings On Aug 9: MYL, INCY & More

The Q2 earnings season is almost approaching its end with 87.7% (as of Aug 5) of the S&P 500 members having already reported results. The Retail sector is the only one at this point that has a substantial number of reports still to come.

But how has this particular earnings season turned out to be? Though the Q2 growth pace pace has “improved” with companies reporting better results, still the quarter is on its way to be the fifth in a row to record an earnings decline for the S&P 500 index. So far, of the 433 S&P 500 companies that have reported as of Aug 5, 70.7% breezed past earnings expectations while 52.7% exceeded revenue estimates.

Results in the Technology and Medical sectors have been remarkably better than anticipated. These two sectors have also recorded the highest proportion of positive surprises.

Particularly, our Q2 scorecard for the Medical sector shows that 86.5% have reported results with a blended beat of 77.8% (the percentage of companies that have beaten both earnings per share as well as revenue estimates) with the sector posting 6.5% earnings growth on revenue growth of 9.9%.

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

Among drug stocks lined up to report on Aug 9, let’s take a look at three such companies.

What to Expect from these Drug Stocks?

Generic drug maker, Mylan N.V.’s (NASDAQ:MYL) performance has been impressive with the company beating earnings estimates in three of the last four quarters with an average positive surprise of 1.79%. Mylan currently carries a Zacks Rank #3 (Hold). Though the stock’s Zacks Rank #3 increases the predictive power of the ESP, it also has an Earnings ESP of -1.74%, making a surprise prediction difficult this quarter. The company is scheduled to release Q2 results on Aug 9.

The company’s business segments – Generics and Specialty – should continue to perform well in Q2. While the Generics segment should benefit from new product launches, the Specialty segment should benefit from higher volumes of EpiPen. Late last week, Mylan announced the completion of the acquisition of the Swedish drug maker, Meda (read more: Mylan Q2 Earnings: Will the Stock Disappoint?).

Oncology focused Incyte Corporation (NASDAQ:INCY) is a biopharmaceutical company with a pretty good track record having surpassed expectations in three of the last four quarters with an average positive surprise of 101.83%. Headquartered in Wilmington, DE, Incyte has a favorable Zacks Rank #2 (Buy), but an ESP of 0.00% makes a surprise prediction uncertain this quarter. The company’s only approved product, Jakafi, should continue to drive top-line growth in this quarter as well. Meanwhile, Incyte has a broad pipeline including both targeted and immune therapies. Update on the pipeline front will be another area of focus along with the performance of Jakafi. The company is scheduled to release Q2 results on Aug 9.

Copenhagen, Denmark-based Genmab A/S GNMSF is a biotechnology company focused on the development of differentiated antibody therapeutics for the treatment of cancer. The company has two approved antibodies in its portfolio – Arzerra (for the treatment of certain chronic lymphocytic leukemia indications) and Darzalex (for the treatment of heavily pre-treated or double refractory multiple myeloma). Genmab has a licensing agreement with Johnson & Johnson (NYSE:JNJ) ’s Janssen Biotech for Darzalex and Novartis AG (NYSE:NVS) for Arzerra. Genmab also has a broad pipeline.

Last quarter, Genmab reported a positive earnings surprise of 88%. Genmab currently has a Zacks Rank #4 (Sell) and an ESP of 0.00%. 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 9.