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You may or may not have heard, but it's earnings season again. Contrary to popular belief, earnings season does actually take a break for a few weeks in between quarters; however, we're in the midst of a big ramp-up in earnings reports from some of America's largest companies.
Next week we can expect some of the largest companies in health care to report their earnings results. While all earnings reports are important, certain companies have a lot more on the line than others this earnings season. Consider the following five companies an absolute "must-watch" when they report their quarterly results next week.
Wednesday, July 24
Eli Lilly (NYSE: LLY )
Dubbed the most perilous pipeline by me earlier this year, Eli Lilly is expected to report a 4% increase in revenue to $5.8 billion and a 20% increase in EPS to $1 on Wednesday. Call me a bit skeptical, though, considering that Lilly's pipeline is in pretty poor shape. Both Cymbalta and Humalog will soon be exposed to generic competition, and they represent about 30% of Eli Lilly's total revenue. With no drugs outside of the soon-to-be off-patent Cymbalta and Cialis demonstrating double-digit sales growth in the first quarter, Lilly is going to need to pull a rabbit out of its hat to appease shareholders.
InterMune (NASDAQ: ITMN )
InterMune shares may have exploded higher by 30% over the past week, but there's certain to be a lot of nail-biting on the part of shareholders as we head into earnings season. The reason has been the slow acceptance of the company's idiopathic pulmonary fibrosis drug, Esbriet, based on its pricing in the EU. In previous quarters Esbriet sales have disappointed in a big way, but are expected to rise by 134% to nearly $13 million from last year, though losses are still anticipated to come in at $0.70 per share. Following its recent pop, Esbriet sales had better hit the mark, otherwise InterMune shareholders are probably going to be in for a long day.
Thursday, July 25
Gilead Sciences (NASDAQ: GILD )
Gilead shares have been on a tear over the past year, thanks to the promise of oral hepatitis-C drug sofosbuvir, which is currently under review by the FDA. However, the company will now need to meet the extremely high hopes of investors in the second-quarter if it has any chance of heading higher. Estimates for the quarter call for nearly 11% sales growth to $2.66 billion with flat year-over-year EPS of $0.50. Although the markets will be waiting for an update on sofosbuvir, don't discount the importance of Stribild sales which represents the cornerstone of HIV treatments. As an educated guess, with $92.1 million in Stribild sales in Q1, and $30 million in Q4, anything less than $150 million this quarter will be viewed as a disappointment in my books.
Alexion Pharmaceuticals (NASDAQ: ALXN )
If there's one company that certainly has big shoes to fill this earnings season its orphan drug developer Alexion whose lone drug, Soliris, is anticipated to bring in about $1.5 billion in sales this year. For the quarter, Alexion is forecast to grow revenue by 33% to $365 million with EPS rising 45% to $0.68. Given that Alexion has topped Wall Street's EPS estimates by an average of 19% in each of the past four quarters, I'd certainly be expecting an earnings beat if I were a shareholder. My worry here is that with Roche demonstrating potential interest in Alexion, even a big boost in its bottom line may not be enough to sustain Alexion at 34 times forward earnings.
BioMarin Pharmaceuticals (NASDAQ: BMRN )
BioMarin might as well be considered a long lost sibling of Alexion, since they are both focused on developing rare orphan drugs which have practically no competition and hefty annual price tags, often in six-figures. However, whereas Alexion is profitable, BioMarin has some "'splaining to do," as Desi Arnaz used to say. Estimates in the upcoming quarter call for sales growth of just 8% to $134 million with losses expected to widen to $0.29 per share. Naglazyme's 1% sales increase last quarter didn't impress at all, so it'll need Aldurazyme to really step up if it hopes to maintain its frothy valuation.
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