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5 Must-Watch Earnings Reports in the Health-Care Sector This Week

By Sean Williams - Apr 21, 2013 at 11:45AM

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With nearly six dozen health-care companies reporting earnings this week, consider these five the most important.

If you haven't noticed, it's earnings season once again! Believe it or not, there are times when earnings reports slow down in frequency, but this is certainly not one of those times. In the health-care sector we have 71 companies set to report next week, according to Finviz, so it definitely pays to be prepared. Here's your personal cheat sheet to the five companies reporting next week that I've got my eye on and that you can't afford to miss.

Wednesday, April 24

  • Eli Lilly (LLY 4.39%): Lilly is in the midst of a very dangerous period in its company's history, since it's set to lose a good chunk of its revenue to patent expirations between now and 2017. Reports from Eli Lilly have confirmed that the company is planning layoffs to reduce expenses, but a report by The Wall Street Journal indicated that layoffs could reach as many as 1,000 people. It's therefore extremely important -- especially considering that so many income investors rely on Lilly's dividend -- to keep an eye on what the company has to say about what's going on in its pipeline and what actions it's taking to reduce costs. Lilly's first-quarter expectations are for 1% sales growth and a 14% jump in EPS, but I'm not convinced that they'll reach those targets.
  • WellPoint (ANTM 2.69%): This will be one of the first looks we get at WellPoint, which purchased Amerigroup last summer to gain access to the millions of Medicaid members under its fold. The Patient Protection and Affordable Care Act is coming up on eight months until it's fully in effect, and insurers are looking as if they won't be in nearly as bad a shape as it was first suspected when the bill was passed. Keep your ears open for anything management might have to say about premiums, and certainly key on anything WellPoint has to say with regard to the PPACA, also known as Obamacare. Revneue is expected to jump 19% (mainly from its acquisition of Amerigroup) to $18 billion, while EPS are forecast to jump $0.04 to $2.38 from the year-ago period. 

Thursday, April 25

  • Biogen Idec (BIIB 3.40%): Biogen is so hot right now, I'd highly recommend using oven mitts when handling shares. Over the past quarter, Biogen announced the purchase of the remaining global rights to multiple sclerosis drug Tysabri from Elan for $3.25 billion in cash and had the Food and Drug Administration approve its revolutionary new MS-drug Tecfidera. I don't believe Biogen Idec's first-quarter results will have much bearing on its share price so much as its forward guidance. This will be the first time Wall Street gets a glimpse at the growth Biogen expects from Tecfidera sales as well as owning the full global rights to Tysabri. Pay attention to its full-year EPS forecast and anything the company has to say regarding its 2014 growth estimates.
  • Celgene (CELG): Celgene's CEO, Robert Hugin, made some very bold claims at the JPMorgan Healthcare Conference in January that his company would be able to triple revenue and double EPS growth by 2017 based solely on organic growth. Consider this quarter the first test of that assertion. Things have definitely moved in Celgene's favor, with Abraxane gaining additional indications in cancer treatment and Revlimid sales running strong. However, it'll need to gain approval of Apremilast to treat psoriasis if it hopes to achieve its lofty growth targets. Following Celgene's huge first-quarter run, the company's guidance here will be everything, so focus all of your attention on that, and any comments with regard to the advancement of Apremilast.
  • Alexion Pharmaceuticals (ALXN): Having seen Affymax shares implode because of a recall, I'm always concerned about companies whose entire pipeline lives and dies off one drug. Alexion's Soliris is a billion-dollar blockbuster, but its entire pipeline involves the use of Soliris in one indication or another. Therefore, my big focus in Alexion's first-quarter report will be if it can top EPS expectations by double digits. Alexion's previous four reports have all trumped estimates by a mile, and any less than a 10% beat given its lack of diversification could be enough to pummel its already lofty share price.

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Stocks Mentioned

Eli Lilly and Company Stock Quote
Eli Lilly and Company
LLY
$298.85 (4.39%) $12.58
Celgene Corporation Stock Quote
Celgene Corporation
CELG
Biogen Inc. Stock Quote
Biogen Inc.
BIIB
$199.65 (3.40%) $6.56
Alexion Pharmaceuticals, Inc. Stock Quote
Alexion Pharmaceuticals, Inc.
ALXN
Anthem, Inc. Stock Quote
Anthem, Inc.
ANTM
$492.85 (2.69%) $12.93

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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