Q1 Earnings Surprise Well In Cards: Healthcare ETFs To Buy

Healthcare space has been on a tough journey this year. The popular ETF like Health Care Select Sector SPDR Fund XLV has shed 0.4% so farwhile Vanguard Health Care ETF (AX:VHT) and Fidelity MSCI Health Care Index ETF FHLC have gained at least 0.8%. Meanwhile, iShares U.S. Healthcare ETF IYH has added 0.1%.

The mixed trend is likely to continue heading into the Q1 earnings season as some big names like Pfizer (NYSE:PFE) , Merck (NYSE:MRK) , Amgen (NASDAQ:AMGN) , AbbVie (NYSE:ABBV) , Gilead Sciences (NASDAQ:GILD) and Bristol-Myers Squibb (NYSE:BMY) are lined up to report this week and in the next. All these stocks collectively account for 26.3% share in XLV, 24.6% in IYH, 23.9% in VHT and 22.5% in FHLC (read: Healthy Q1 Earnings at UnitedHealth: ETFs to Watch).

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 the 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 #2 and an Earnings ESP of +1.36%, indicating a higher chance of beating estimates this quarter. The stock has seen positive earnings estimate revision of seven cents for to-be-reported quarter and delivered an average positive earnings surprise of 4.97% for the past four quarters. It has a VGM Score of B. Pfizer is scheduled to report earnings on May 1, before the opening bell.

Merck is expected to report results on May 1 before the market opens. It has a Zacks Rank #2 and an Earnings ESP of 0.00%. The stock delivered a positive earnings surprise in the last four quarters, with an average beat of 8.54% but witnessed a positive earnings estimate revision of eight cents over the past 90 days for the to-be-reported quarter. Merck has a VGM Score of C.

Amgen carries a Zacks Rank #3 and has an Earnings ESP of +3.34%, indicating a reasonable chance of beating estimates this time around. The earnings surprise track over the past four quarters is strong with an average positive surprise of 2.94%. In addition, Amgen witnessed positive earnings estimate revision of three cents over the past 90 days for the quarter to be reported. The stock has a solid VGM Score of A. Amgen will report earnings on Apr 26 after market close (read: Why These Small Cap Biotech ETFs are Soaring).

AbbVie has a Zacks Rank #3 and an Earnings ESP of +0.06%. The company delivered a positive earnings surprise in the last four quarters, with an average beat of 1.81% and saw solid earnings estimate revision of 31 cents over the past three months for the to-be-reported quarter. The stock has a solid VGM Score of B. The company is scheduled to report on Apr 26 before the opening bell.

Gilead is expected to release earnings on May 1 after market close. It has a Zacks Rank #2 and an Earnings ESP of +0.32%. Gilead delivered positive earnings surprises of 7.47% over the last four quarters but saw negative earnings estimate revision of a penny over the past three months for the to-be-reported quarter. It has a VGM Score of C.

Bristol-Myers will likely report earnings on Apr 26 before the opening bell. It has a Zacks Rank #3 and an Earnings ESP of +0.82%. The stock delivered an average positive earnings surprise of 4.23% over the past four quarter, and witnessed positive earnings estimate revision of 10 cents for the to-be-reported quarter. It has a VGM Score of C.

Summing Up

With earnings surprises well in the cards, the healthcare sector is expected to witness earnings growth of 9.4% in the first quarter, suggesting some upside for healthcare ETFs. In particular, all the four ETFs have a Zacks ETF Rank #3 (see: all the Healthcare ETFs here).

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Bristol-Myers Squibb Company (BMY): Free Stock Analysis Report

Pfizer Inc. (PFE): Free Stock Analysis Report

Merck & Co., Inc. (MRK): Free Stock Analysis Report

AbbVie Inc. (ABBV): Free Stock Analysis Report

SPDR-HLTH CR (XLV): ETF Research Reports

VIPERS-HLTH CR (VHT): ETF Research Reports

ISHARS-US HLTHC (IYH): ETF Research Reports

FID-H CARE (FHLC): ETF Research Reports

Gilead Sciences, Inc. (GILD): Free Stock Analysis Report

Amgen Inc. (AMGN): Free Stock Analysis Report

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