Biotech ETFs Are Back In Vogue (IBB)

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August 13, 2018 6:14am NASDAQ:IBB

NASDAQ:IBB | News, Ratings, and Charts

From Zacks: The biotech sector has been performing remarkably well driven by a wave of mergers & acquisitions, new tax legislation, and a positive regulatory backdrop.


Strong Q2 earnings results have also added to the strength as most of the biotech giants such as Amgen Inc (AMGN – Free Report) , Gilead Sciences (GILD – Free Report) , Biogen Inc (BIIB – Free Report) and Alexion Pharmaceuticals (ALXN – Free Report) have topped the estimates on both earnings and revenues(read: Health Care ETFs)

Earnings in Focus

Amgen reported second-quarter earnings per share of $3.83, which beat the Zacks Consensus Estimate of $3.52 and improved from the year-ago earnings of $3.27. Revenues of $6.06 billion also came ahead of the estimated $5.72 billion and were up from $5.81 billion reported in the year-ago quarter.

Amgen raised its sales and earnings guidance for 2018. Better-than-expected second-quarter results and an optimistic outlook for the rest of the year led to the increase in earnings guidance.

The company now expects its revenues in the range of $22.5-$23.2 billion compared with the previous prediction of $21.9-$22.8 billion. Adjusted earnings are now anticipated in the range of $13.30-$14.00 in 2018 compared with the previous projection $12.80-$13.70.

Gilead Sciences beat the earnings estimate by 28 cents and but 76 cents lower than the year-ago quarter. The revenue estimates were beaten by $470 million but $1493 million below the year-ago quarter.

Gilead continues to expect net product sales in the range of $20-$21 billion. The company raised its diluted, adjusted EPS guidance range to $1.50-$1.60 per share from the previously announced $1.41-$1.51.

Biogen reported a positive surprise of 11.11% on earnings and 3.3% on revenues. Earnings improved year over year by 15.08% and revenues by 9.06%.

Biogen raised its revenue expectations for the full year in the range of $13-$13.2 billion from the previous expectation of $12.7-$13 billion. The company also increased its earnings expectation from $24.20-$25.20 per share to $24.90-$25.50.

Alexion Pharmaceuticals beat the Zacks Consensus Estimate on earnings by 39 cents and showed a year-over-year improvement of 43.51%.Revenues also topped by the estimated $63 million and marks a year-over-year improvement of 14.59%.

The company raised its earnings per share and revenue guidance for 2018. It expects earnings per share in the range of $7.00-$7.15, up from the previous forecast of $6.75-$6.90. Alexion projects revenues to be in the band of $3.98-$4.01 billion, up from its previous expectation of $3.93-$3.99 billion.

The earnings boost has pushed the biotech ETFs higher over the past one month. Below, we have highlighted the four most-popular ETFs with high exposure to the above-mentioned companies.

iShares Nasdaq Biotechnology ETF (IBB – Free Report)

This fund tracks the NASDAQ biotechnology index. The fund has 191 holdings with 28.78% weightage to the mentioned four companies. It has an AUM of $9.25 billion and an expense ratio of 0.47%.The fund has gained 1.52% over a one-month period. It has a Zacks ETF Rank of #3 (Hold) with a High risk outlook (read:What investors need to know about Biotech ETFs).

VanEck Vectors Biotech ETF (BBH – Free Report)

The fund tracks the MVIS US Listed Biotech 25 Index. It has a pool of 25 stocks with 28.78% the weightage of the mentioned four companies. It has an AUM of $472.3 million and an expense ratio 0.35%.The fund has gained 3.52% over a one-month period. It sports a Zacks ETF Rank #1 (Strong Buy) and has a High risk outlook (read:Biotech ETFs Surge on Biogen’s Positive Drug Trial Result).

First Trust Amex Biotechnology Index (FBT – Free Report)

It tracks the equal-weighted NYSE Arca Biotechnology Index. There are 30 holdings in the basket with FBT holding 12.9%. The AUM is $2.16 billion, while expense ratio is 0.56%. The fund has a Zacks ETF Rank #2 (Buy) with a High risk outlook.

iShares Evolved U.S. Innovative Healthcare ETF(IEIH – Free Report)

This is an actively managed fund, with a pool of 198 holdings. The companies mentioned here hold a 16.92% aggregate weight. The fund has AUM of $5.30 million and expense ratio of 0.18%.


The iShares Nasdaq Biotechnology ETF (IBB) was unchanged in premarket trading Monday. Year-to-date, IBB has gained 9.33%, versus a 6.53% rise in the benchmark S&P 500 index during the same period.

IBB currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #2 of 35 ETFs in the Health & Biotech ETFs category.


This article is brought to you courtesy of Zacks Research.


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