It’s Big Pharma’s Turn in the Earnings Confessional
Many of the top pharmaceutical companies are working on a vaccination for COVID-19. It seems as if new trial results are released on a daily basis for one drug or another. The global pandemic has certainly changed the fortunes for a number of companies and the attention is obviously warranted.
We don’t have a vaccine yet and there is definitely a race on between big pharma companies to produce a viable vaccine. In the meantime, it seems as if the earnings reports of the companies have taken a backseat to the vaccine research. That may change this week as several major pharmaceutical companies will report earnings on Thursday and Friday.
AstraZeneca (AZN) and Eli Lilly (LLY) are both set to report earnings on Thursday, July 30. Merck (MRK) is set to report on Friday, July 31.
Looking at the Tickeron scorecard, Eli Lilly is rated as a “strong buy” and Astrazeneca is rated as a “buy”. Merck doesn’t fare as well and is rated as a “sell”. The major pharmaceutical industry as a whole is rated as a “sell” so these three are above average as a group. Looking at the price change of these three stocks over the past year we see that Merck has not performed well compared to Lilly and Astrazeneca. Lilly is up over 50% and Astrazeneca is up almost 34%. Merck is down ever so slightly over the last 12 months.
We see that Lilly does extremely well with its fundamental ratings with five positive readings and not a single negative one. Astrazeneca does almost as well with four positive readings and one negative reading. We see the summary below and it includes all of the positive ratings for Astra. The two that aren’t shown for Lilly are its outlook and its seasonality score.
Merck doesn’t do terribly on its fundamental ratings. It has three positive ratings and one negative rating. The negative one is pretty high at 73 and that’s the P/E Growth Rating.
I took note of the fact that all three stocks are considered undervalued at this time and all three have really low scores—single-digit low. The Profit Vs. Risk Rating and the SMR Rating for Lilly are also really low and in the single digits. That helps explain why the stock gets a “strong buy” rating.
Turning our attention to the technical analysis ratings, Astra actually scores a little better than Lilly and Merck doesn’t fare as well once again. Astra gets positive ratings in the MACD, Momentum, and Moving Average categories with negative ratings from the Bollinger Bands and the RSI.
Lilly gets positive ratings from the AROON Indicator and from the Bollinger Bands and it gets negative ratings from the RSI and the Momentum Indicator. Merck’s only positive rating is from the Momentum Indicator and it doesn’t get any negative ratings at this time.
If you look at the weekly charts of the three stocks, Astra was in overbought territory based on a 10-week RSI and the weekly stochastic indicators, but a decline last week moved the stock below overbought levels. Lilly was also overbought based on the weekly stochastic readings, but the RSI hasn’t been in overbought territory since February. With Merck lagging the other two and the overall market, its oscillators are down around the middle of the range at this time. Merck has been grinding sideways between $75 and $82.50 since March.
Heading in to the earnings reports, Astra and Lilly have seen small reductions in the EPS estimate over the last three months while Merck’s estimate has dropped more significantly. Astra and Lilly are both expected to see earnings grow compared to the second quarter of 2019, but Merck is expected to see earnings decline by 20%.
One of the more interesting things I found when looking at the sentiment was that Merck had the highest buy percentage from analysts. Of the 18 analysts covering the stock, 13 gave the stock a “buy” rating with five “hold” ratings. This gives us a buy percentage of 72.2%. Astra’s buy percentage is 66.7% and Lilly’s is 53.3%.
None of the three short interest ratios (SIR) are very high, but Astra’s is really low at only 0.2. While this isn’t necessarily a negative for the stock, it just means that a short covering rally isn’t in the works.
Looking at all of the data from all three analysis styles, I am in complete agreement with the Tickeron Scorecard. Lilly looks the best of the three for the long-term and I would also consider it a strong buy. Astrazeneca looks good as well and I think a buy rating is accurate. Merck just doesn’t look all that great right now and probably deserves a sell rating or a hold rating at best.
AZN in upward trend: price expected to rise as it breaks its lower Bollinger Band on April 04, 2025
AZN may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options. In of 32 cases where AZN's price broke its lower Bollinger Band, its price rose further in the following month. The odds of a continued upward trend are .
Technical Analysis (Indicators)
Bullish Trend Analysis
The RSI Indicator points to a transition from a downward trend to an upward trend -- in cases where AZN's RSI Oscillator exited the oversold zone, of 27 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .
The Momentum Indicator moved above the 0 level on April 22, 2025. You may want to consider a long position or call options on AZN as a result. In of 89 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .
The Moving Average Convergence Divergence (MACD) for AZN just turned positive on April 23, 2025. Looking at past instances where AZN's MACD turned positive, the stock continued to rise in of 44 cases over the following month. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where AZN advanced for three days, in of 348 cases, the price rose further within the following month. The odds of a continued upward trend are .
Bearish Trend Analysis
The Stochastic Oscillator has been in the overbought zone for 2 days. Expect a price pull-back in the near future.
AZN moved below its 50-day moving average on April 04, 2025 date and that indicates a change from an upward trend to a downward trend.
The 10-day moving average for AZN crossed bearishly below the 50-day moving average on April 03, 2025. This indicates that the trend has shifted lower and could be considered a sell signal. In of 17 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where AZN declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
The Aroon Indicator for AZN entered a downward trend on April 21, 2025. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (5.325) is normal, around the industry mean (5.632). P/E Ratio (35.297) is within average values for comparable stocks, (48.974). Projected Growth (PEG Ratio) (0.870) is also within normal values, averaging (3.004). Dividend Yield (0.022) settles around the average of (0.161) among similar stocks. P/S Ratio (4.585) is also within normal values, averaging (3.643).
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 74, placing this stock better than average.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. AZN’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
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a manufacturer of pharmaceutical products
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