How are biotech ETFs reacting to these first quarter earnings releases?

The biotechnology sector has been in a difficult situation for some time now. The Nasdaq Biotechnology Index has lost about 25.9% over the past year. However, the space has seen new investment opportunities to introduce vaccines and treatment options during the pandemic. Additionally, the rise in merger and acquisition (M&A) operations, the growing dominance of artificial intelligence (AI), and favorable regulatory news can work in favor of the biotech market.

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

Gain in the foreground

April 27 Amgen AMGN reported first-quarter 2022 earnings of $ 4.25 per share, surpassing Zacks’ consensus estimate of $ 4.22. Earnings were up 15% year-over-year, largely due to improved revenues and lower stock counts. Total revenue of $ 6.24 billion for the quarter topped the Zacks Consensus Estimate of $ 6.06 billion. Additionally, total revenue increased 6% year-over-year, mainly driven by growth in other revenue and increased product sales.

Amgen has maintained its range of financial guidelines for 2022. It expects revenues to range from $ 25.4 to $ 26.5 billion. The 2022 Adjusted Earnings Per Share Guide is set between $ 17.00 and $ 18.00.

April 28 Gilead Sciences GILD posted earnings of $ 2.12 per share for the end-March quarter, up from $ 2.04 in the quarter a year ago. The figure surpassed Zacks’ consensus estimate of $ 1.77. Total revenue of $ 6.6 billion surpassed Zacks’ consensus estimate of $ 6.2 billion and was up 3% from a year ago quarter, mainly thanks to growing demand for Biktarvy. [bictegravir 50mg/emtricitabine 200mg (FTC)/tenofovir alafenamide 25mg (TAF)] and Veklury.

The company maintained its 2022 guidelines. Product sales are expected to be between $ 23.8 and $ 24.3 billion. Total product sales, excluding Veklury, are expected in the $ 21.8- $ 22.3 billion range. Veklury’s total sales are estimated to be around $ 2 billion. Earnings per share are expected in the range of $ 6.20 to $ 6.70.

May 3 Biogen BIIB reported first quarter 2022 earnings per share of $ 3.62, lagging behind Zacks’ consensus estimate of $ 4.41. In the quarter of a year ago, Biogen had posted earnings of $ 5.41 per share. Sales totaled $ 2.52 billion, down 6% (5% at constant currency) from last year’s quarter, penalized by the continued decline in sales of its primary drugs. However, the metric surpassed Zacks’ consensus estimate of $ 2.50 billion.

Featured biotech ETFs

We believe it is prudent to discuss some ETFs with relatively broader 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 US listed equities in the biotechnology sector. It includes 372 holdings, with the aforementioned companies taking about 20.6% of the fund. It has an AUM of $ 7.78 billion and charges a 45 basis point fee per year. IBB has lost about 10.2% since April 27 (to May 9). The fund has 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 drug development and manufacturing, marketing and sales based on genetic testing and diagnostic equipment. It holds around 25 stocks in its basket, with the companies concerned having a weight of 26.8% in the fund. Its AUM is $ 458.2 million and the expense ratio is 0.35%. BBH fell by about 8.9% from April 27 (to May 9). The fund currently has 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, that match the S&P Biotechnology Select Industry Index. It holds around 157 stocks in its basket and puts companies in the forefront. Its AUM is $ 5.64 billion and the expense ratio is 0.35%. XBI has lost about 16% since April 27 (to May 9). The fund has a Zacks ETF Rank # 2, with a high risk outlook.

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Biogen Inc. (BIIB): Free inventory analysis report

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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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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