Six ETFs to play Pfizer’s Q3 earnings report

Oct 31st, 2016 | By | Category: Equities

For investors who believe Pfizer is set to report better-than-expected third quarter earnings on 1 November, there are several health care exchange-traded funds which offer exposure to the New York-based pharmaceuticals giant.

Six ETFs to play Pfizer’s Q3 earnings report

Analysts surveyed by Yahoo! Finance project Pfizer to report earnings of 62 cents a share on $13.05bn in revenue in its Q3 earnings statement.

Analysts surveyed by Yahoo! Finance project the company to earn 62 cents a share on $13.05bn in revenue.

Investors will also be watching the potential for its new Inflectra drug – set to be launched two years ahead of schedule – and the risk of “major M&A activity over the next 12 months”, say analysts from Jefferies.

Inflectra, a biologic drug designed to treat auto-immune diseases, was approved by authorities in April and will be marketed for sufferers of Crohn’s disease, colitis, arthritis and severe plaque psoriasis. It could generate sales in the US of $243m and non-US sales of $355m in 2017, according to BMO Capital analysts. Another drug which could generate more revenue is Ibrance, which Pfizer wants to position as the standard drug used for metastatic breast cancer chemotherapy treatment.

The sales could provide a boost for the $193bn market cap stock, which is up less than 1% since 1 January and has fallen almost 8% over the last 12 months, while the S&P 500 Index rose 4% over the latter period. That being said, the relatively flat returns for the stock year-to-date compare favourably to the 2.4% decline in the S&P 500 Health Care Sector Index over this period.

Most providers in Europe offer a fund tracking the bellwether S&P 500, of which Pfizer makes up 1.05%, with fees from as little as 0.05% from the Source S&P 500 UCITS ETF (LON: SPXS).

The iShares S&P 500 Health Care Sector UCITS ETF (LON: IUHC) provides a more targeted exposure of the pharmaceutical giant. It tracks 59 holdings, with Johnson & Johnson at almost 12% and Pfizer in second place at 7.5%. The fund launched in November last year and has since grown to more than $34m in assets, costing 0.15% in fees. Other top holdings are Merck & Co at 6.4%, United Health Group at 5.1% and Amgen at 4.6%.

The $131.8m SPDR S&P US Health Care Select Sector UCITS ETF (LON: SXLV) and the $105m Source Healthcare S&P US Select Sector UCITS ETF (LON: XLVS) tracks the same index and costs 0.15% and 0.30% respectively.

For more diversified exposure within health care, there are three ETFs that replicate the performance of a global health care index.

The $69m SPDR MSCI World Health Care UCITS ETF (LON: WHEA) has Johnson & Johnson and Pfizer as the top two holdings at 7.9% and 4.9% respectively, followed by Novartis (4.1%) and Roche (4.1%). It costs 0.30% and has fallen 7.4% over the last three months in USD terms.

The £202m ($246m) Lyxor MSCI World Health Care UCITS ETF (LON: HLTG) tracks the same index as the SPDR ETF. The US makes up two thirds of the exposure, followed by Switzerland at 9.1% and Japan at 5.7%. It costs 0.40%. Listed in sterling, the fund is up 11.3% year to date due to the currency exchange.

The third option, the $173m db x-trackers MSCI World Health Care Index UCITS ETF (LSE: XDWH), costs 0.45% in fees.

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