Next week is a big one for health care, as some of the largest drugmakers and health insurers in the country get set to report quarterly earnings.
Among those reporting are Allergan plc (AGN - Get Report) on Monday, April 30, and Merck & Co. Inc. (MRK - Get Report) , Pfizer Inc. (PFE - Get Report) and health insurer Aetna Inc. (AET) on Tuesday, May 1. Here's what to watch for:
The Botox maker, which is slated to report first-quarter results on April 30, could outperform expectations if its aesthetic offerings remain robust "in spite of traditional seasonal weakness," according to Mizuho Securities USA LLC analyst Irina R. Koffler in an April 20 note.
Analysts, on average, expect the Dublin company to post non-GAAP earnings per share of $3.36 on revenue of $3.594 billion, according to FactSet Research Systems Inc.
"Given the longer duration of [dry eye medication] Restasis, we now believe the company may even be able to raise guidance in 1Q:18," Koffler added.
The earnings call, however, might center on Allergan's strategic alternatives instead of the company's underlying business, the analyst said.
Allergan, an Action Alerts PLUS holding, said on April 19 it was was no longer interested in pursuing Shire plc, hours after it had indicated it was considering an offer. Allergan said it continues to evaluate potential strategic moves such as divestitures, combinations and acquisitions.
Earlier in April, media reports stated that Allergan was considering selling its women's health unit, which includes Estrace cream, a vaginal product; birth control pill Lo Loestrin Fe; and Latisse, a treatment to promote eyelash growth.
Allergan chairman, president and CEO Brent Saunders said at the Barclays healthcare conference in March that the company was taking a "full, fresh look" at every option available to create value. "We are going to look at every idea. We're going to consider every option and we're going to see if there are opportunities to create value and we're going to do that with a sense of urgency," Saunders said.
Shares of Allergan closed up nearly 1% to $162.04 on Friday. The stock is down almost 1% year-to-date and down 33% over the last 12 months.
When Merck conducts its earnings call on May 1, investors will focus on the uptake of immunotherapy Keytruda, particularly in non-small cell lung cancer, according to Credit Suisse Securities (USA) LLC analyst Vamil Divan in a note on April 20.
Kenilworth, N.J.-based Merck on April 16 announced positive results from the Phase 3 Keynote-189 clinical trial of Keytruda in tandem with pemetrexed (Alimta) and platinum chemotherapy for advanced lung cancer at the American Association for Cancer Research's annual meeting.
On April 9, the company said its Phase 3 Keynote-042 study of Keytruda as a monotherapy for locally advanced or metastatic non-small cell lung cancer achieved its primary endpoint of overall survival.
Following those announcements, Divan expects that the focus of the earnings call will be on how quickly Merck thinks it can gain market share in the first-line treatment of non-small cell lung cancer beyond patients whose tumors have high programmed death-ligand 1 (PD-L1) expression. PD-L1 is a form of protein.
Analysts expect Merck to have non-GAAP EPS of $1 on revenue of $10.087 billon for the first quarter, according to FactSet. Analysts are projecting Keytruda to generate revenue of $1.385 billion.
"Although we expect to see strong sales and earnings from MRK driven by Keytruda, we, and investors, hope to see further diversification of their portfolio either through its pipeline or business development deals," Divan wrote.
Shares of Merck ended Friday's trading session at $59.47, up 0.1%. The stock is up 5.7% year-to-date and down nearly 5% over the last 12 months.
Also reporting results on May 1 is Pfizer and Credit Suisse's Divan wrote that he expects the focus of the earnings call will be on any updates on the New York firm's business development strategy "after some recent comments suggesting they are less likely to do a larger deal."
Another area of focus will be the consumer healthcare division. Pfizer said in October it was reviewing strategic alternatives for the unit and expected to make a decision in 2018. Options include selling the unit, spinning it off and retaining it.
In January, Reuters reported that Johnson & Johnson (JNJ - Get Report) dropped out of the running for the business. On March 22, Reckitt Benckiser Group plc said it had terminated talks for parts of the Pfizer division and a day later, GlaxoSmithKline plc (GSK - Get Report) issued a statement saying it had withdrawn from the process for the business. Procter & Gamble Co. (PG - Get Report) , which was reported by CNBC on April 3 to be in talks for the Pfizer unit, on April 19 unveiled a deal to buy Merck KGaA's consumer healthcare business.
From a product standpoint, Divan said his focus will be on pneumonia and meningitis vaccine Prevnar and breast cancer drug Ibrance, particularly with Ibrance facing increased competition from Novartis AG (NVS - Get Report) and Action Alerts PLUS holding Eli Lilly & Co. (LLY - Get Report) .
Analysts have forecast, on average, Prevnar sales of $1.359 billion and Ibrance sales of $948.8 million.
They estimate that Pfizer will post non-GAAP EPS of 74 cents on revenue of $13.138 billion.
Pfizer's shares closed at $37 on Friday, up 0.4%. The stock is up 2.2% year-to-date and up 9.3% over the last 12 months.
Another company scheduled to release first-quarter numbers on May 1 is Aetna. The Hartford, Conn.-based firm does not plan to conduct an earnings call due to its pending sale to CVS Health Corp. (CVS - Get Report) .
Analysts expect non-GAAP EPS of $2.87 on revenue of $15.346 billion.
Aetna in December agreed to sell to CVS for $69 billion. With the assumption of debt, the total transaction value is $77 billion. The companies expect to close the transaction in the second half of the year.
On April 17, Aetna said it has realigned its business segments effective the first quarter to "correspond with changes to its management structure and internal management reporting."
Shares of Aetna finished at $179.88 on Friday, up 0.6%. The stock is down 0.3% year-to-date and up 34.3% over the last 12 months.
Jim Cramer and the AAP team hold positions in Allergan and Eli Lilly & Co. for their Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells AGN or LLY? Learn more now.