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How Are Biotech ETFs Reacting to These Q1 Earnings Releases?

·4-min read

The Biotech sector has been in a tough spot for quite some time now. The Nasdaq Biotechnology Index has lost about 25.9% over the past year. However, the space witnessed new investment opportunities to introduce vaccines and treatment options amid the pandemic. Moreover, the rise in merger and acquisition (M&A) deals, growing artificial intelligence (AI) dominance and favorable regulatory tidings can work in favor of the biotech market.

Let’s take a look at some big biotechnological earnings releases to see if these will impact ETFs exposed to the space.

Earnings in Focus

On Apr 27, Amgen AMGN reported first-quarter 2022 earnings of $4.25 per share, surpassing the Zacks Consensus Estimate of $4.22. Earnings increased 15% year over year, largely due to improved revenues and decreased share count. Total revenues of $6.24 billion in the quarter exceeded the Zacks Consensus Estimate of $6.06 billion. Also, total revenues were up 6% year over year primarily buoyed by growth in Other Revenue and increased product sales.

Amgen retained its financial guidance range for 2022. It expects revenues in the $25.4-$26.5 billion range. The adjusted earnings per share guidance for 2022 is pegged at $17.00 to $18.00.

On Apr 28, Gilead Sciences GILD reported earnings of $2.12 per share for the March-end quarter, up from $2.04 in the year-ago quarter. The figure surpassed the Zacks Consensus Estimate of $1.77. Total revenues of $6.6 billion outpaced the Zacks Consensus Estimate of $6.2 billion and jumped 3% from the year-ago quarter, mainly on rising demand for Biktarvy [bictegravir 50mg/emtricitabine 200mg (FTC)/tenofovir alafenamide 25mg (TAF)] and Veklury.

The company has maintained guidance for 2022. Product sales are projected at $23.8-$24.3 billion. Total product sales, excluding Veklury, are expected in the band of $21.8-$22.3 billion. Total Veklury sales are estimated at around $2 billion. Earnings per share are expected in the range of $6.20-$6.70.

On May 3, Biogen BIIB reported first-quarter 2022 earnings per share of $3.62, which lagged the Zacks Consensus Estimate of $4.41. In the year-ago quarter, Biogen had recorded earnings of $5.41 per share. Sales totaled $2.52 billion, down 6% (5% on a constant currency basis) from the year-ago quarter, hurt by continued lower sales of its primary drugs. However, the metric edged past the Zacks Consensus Estimate of $2.50 billion.

Biotech ETFs in Focus

We believe it is prudent to discuss a few ETFs with a relatively wider exposure to the companies discussed above in the current scenario.

iShares Biotechnology ETF IBB

This fund seeks to track the investment results of an index composed of U.S.-listed equities in the biotechnology sector. It comprises 372 holdings, with the companies mentioned above taking about 20.6% of the fund. It has AUM of $7.78 billion and charges a fee of 45 basis points a year. IBB has lost about 10.2% since Apr 27 (as of May 9). The fund carries a Zacks ETF Rank #2 (Buy), with a High-risk outlook.

VanEck Biotech ETF BBH

The underlying MVIS US Listed Biotech 25 Index tracks the overall performance of companies involved in the development and production, marketing and sales of drugs based on genetic analysis and diagnostic equipment. It holds about 25 securities in its basket, with the concerned companies having 26.8% weight in the fund. Its AUM is $458.2 million and expense ratio is 0.35%. BBH has declined around 8.9% since Apr 27 (as of May 9). The fund currently carries a Zacks ETF Rank #3 (Hold), with a High-risk outlook.

SPDR S&P Biotech ETF XBI

The fund seeks daily investment results, before fees and expenses, which match the S&P Biotechnology Select Industry Index. It holds about 157 securities in its basket and puts some weight in-focus companies. Its AUM is $5.64 billion and expense ratio is 0.35%. XBI has lost around 16% since Apr 27 (as of May 9). The fund carries a Zacks ETF Rank #2, with a High-risk outlook.


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Biogen Inc. (BIIB) : Free Stock Analysis Report
 
Amgen Inc. (AMGN) : Free Stock Analysis Report
 
Gilead Sciences, Inc. (GILD) : Free Stock Analysis Report
 
iShares Biotechnology ETF (IBB): ETF Research Reports
 
SPDR S&P Biotech ETF (XBI): ETF Research Reports
 
VanEck Biotech ETF (BBH): ETF Research Reports
 
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