Healthcare ETFs To Buy On Solid Q2 Earnings Expectations

Healthcare has been the second-best performing sector in the three-month time period driven by its non-cyclical nature, which provides a defensive tilt to the portfolio in a turbulent market against a rising M&A and positive regulatory backdrop.

A popular ETF like Health Care Select Sector SPDR Fund (XLV  - Free Reporthas gained 6.1%, while Vanguard Health Care ETF (VHT  - Free Report), iShares U.S. Healthcare ETF (IYH - Free Report) and Fidelity MSCI Health Care Index ETF (FHLC - Free Report) are up more than 7% each. The strength is likely to continue heading into the Q2 earnings season as some big names like Pfizer (PFE - Free Report) , Merck (MRK  - Free Report), Amgen (AMGN  - Free Report), AbbVie (ABBV  - Free Report), Gilead Sciences (GILD - Free Report) and Bristol-Myers Squibb (BMY - Free Report) are lined up to report this week and in the next. All these stocks collectively account for a 25% share in XLV, 23.3% in IYH, 21.6% in VHT and 21.2% in FHLC.

Let’s dig deeper into the earnings picture of these companies that would drive the performance of the above-mentioned funds in the coming days:

According to our methodology, a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), when combined with a positive Earnings ESP increases our chances of predicting an earnings beat, while a Zacks Rank #4 or 5 (Sell-rated) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Inside Our Surprise Prediction for These Stocks

Pfizer has a Zacks Rank #3 and an Earnings ESP of +0.89%, indicating a reasonable chance of beating estimates this quarter. The stock has seen no earnings estimate revision for to-be-reported quarter over the past 30 days and delivered an average positive earnings surprise of 5.23% for the past four quarters. It has a VGM Score of C. Pfizer is scheduled to report earnings on Jul 31, before the opening bell.

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