There is great opportunity in healthcare. There is also quite a lot of risk. Politicians and consumers alike want lower drug prices. Patients want the best of the best options for devices, monitoring, and in treatments and cures and they seem to not care what the costs are. Over the last two decades, the world of biotech investing has changed drastically. It felt off in years past to predict that the large biotech companies were effectively becoming no different from Big Pharma giants.

At the start of 2019, 24/7 Wall St. highlighted how most of the large cap biotechs with market caps of $20 billion were in many cases screening out as being cheaper than their Big Pharma rivals. That was just a day ahead of the biggest biotech merger in some time. There are also many drug catalysts coming in the next 60 days. Now it’s time to look beyond earnings reports and see how the future guidance, which is generally more clear in healthcare than tech and industrials, values these companies going forward.

Earnings season can bring out some big surprises when it comes to corporate profits and the billions and billions of dollars in revenue opportunities. It turns out that Biogen Inc. (NASDAQ: BIIB) posted a gain in revenues and earnings beat expectations, but the shares were up less than 1% at $333.20 in the reaction. This has been a very range-bound stock as well, with its 52-week range of $249.17 to $388.67 not really looking that much different for most the last 5 years.

It turns out that Biogen’s multiple sclerosis drug Tecfidera is facing competition from newer treatments from the likes of Roche. Biogen has been counting on growth from the spinal muscular atrophy treatment called Spinraza, the first to market, but a 29% gain sales to $470 million was actually shown to be about $18 million less than expected by analysts as pricing pressure and dosing schedules appear to have limited the growth. And for the cost, Reuters noted that Spinraza has a list price of $750,000 in the first year of treatment in the United States and $573,000 in the United Kingdom.

After all this, Biogen’s 2019 adjusted earnings guidance was put in a range of $28.00 to $29.00 per share. The Thomson Reuters consensus estimate was $27.94. At the mid-point of the range, Biogen is valued at less than 12-times earnings and its market cap is $67 billion.

Now look at one of the top-two in Big Pharma earnings after the Pfizer Inc. (NYSE: PFE) report. The Dow Jones Industrial Average component has a value of $234 billion now that its shares have risen by 2.7% to $40.60 after its earnings.

Pfizer’s fourth quarter results were $0.64 in earnings per share (EPS) and $14.0 billion in revenue, which compared with consensus estimates of $0.63 in EPS and $13.91 billion in revenue. In the same period of last year, Pfizer said it had $0.62 in EPS and $13.7 billion in revenue. It’s just not much growth, and at the start of 2019 Pfizer began operating in its previously announced new commercial structure, reorganizing operations into three businesses of Pfizer Biopharmaceuticals Group (PBG), Upjohn and Consumer Healthcare.

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Looking ahead to the 2019 full year, Pfizer’s guidance was in the range of $2.82 to $2.92 EPS and revenue between $52.0 billion to $54.0 billion. Consensus estimates are calling for $3.00 in EPS and $53.54 billion in revenue. At the mid-point of the range, that values Pfizer at just 14 times expected earnings. As far as some segmental issues, there were two areas which partially offset each other: Innovative Health total revenues increased 8% year over year to $8.85 billion; and Essential Health total revenues decreased 7% to $5.12 billion.

Another casting member in the Big Biotech theme is Amgen Inc. (NASDAQ: AMGN) with a $122 billion market cap. Amgen took a serious analyst downgrade on Monday as Evercore ISI lowered its rating to In-Line from Outperform. If this doesn’t sound like a case where Big Biotech and Big Pharma are becoming one, then nothing else does either — it was cut because of patent concerns. Amgen is about to report earnings and the biotech giant is expected to report $3.27 EPS and $5.84 billion in revenues for the fourth quarter. Amgen’s recent drug approvals may be too recent to be adding major growth at this stage. Xgeva was approved in the United States and in Europe for preventing skeletal-related events in multiple myeloma patients, and later in 2018 the drug Blincyto secured approval in Japan and for the pediatric patient population in the United States.

Looking at the last quarter’s gains, Amgen’s third quarter revenue was up just 2% to $5.9 billion and product sales grew only 1% globally. Its adjusted earnings rose by 13% to $3.69 EPS, and that was from the revenue gains, a lower tax rate on the heels of tax reform and also with a lower share count from stock buybacks. These results aren’t awful by any means, but it’s still just not very much growth.

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If the 2019 consensus estimates hold up at $14.62 EPS (from $14.25 in 2018) and $22.94 billion in revenues (down from $23.4 billion in 2018), then Amgen is valued at just 13 times expected earnings. Amgen was last seen trading roughly flat at $192.00 ahead of earnings, and it has a 52-week range of $163.31 to $210.19 and a consensus analyst target price of $206.24.

AbbVie Inc. (NYSE: ABBV) also saw its shares drop down on earnings in recent days. Looking ahead to 2019, the company expects to see EPS in the range of $8.65 to $8.75 and the consensus estimates at that time were calling for $8.71 in EPS and $33.6 billion in revenue for the year. At $76.60, AbbVie is now just valued at less than 9 times expected earnings.

Bristol-Myers Squibb Co. (NYSE: BMY) reported its fourth quarter results last Thursday as $0.94 EPS on $5.97 billion in revenue. That compared to consensus estimates of $0.85 in EPS and $5.99 billion in revenue, as well as the $0.68 per share and $5.45 billion posted in the fourth quarter of 2017. While that should have been good enough, BMS also announced that it has withdrawn its application with the FDA for a combination of its blockbuster cancer immunotherapy drugs Opdivo and Yervoy as an initial treatment for advanced lung cancer. The withdrawal raised questions and the post-earnings reaction kept shares around the $50 mark when its 52-week range is $44.30 to $70.05.

Still, Bristol-Myers Squibb did see some areas of growth. In terms of its prioritized brands, the firm reported that Opdivo grew 33% year over year to $1.80 billion while Eliquis increased 25% to $1.71 billion. Also worth noting: Yervoy increased 43% to $384 million; Orencia grew by 10% to $731 million; and Sprycel grew by 2% to $536 million.

Looking ahead to the 2019 fiscal full year, the company gave guidance of $4.10 to $4.20 EPS with worldwide revenues increasing in the mid-single digits. Consensus estimates call for $4.14 in EPS and $24.2 billion in revenue for the year. That isn’t huge growth but this is now just valuing Bristol-Myers Squibb as about 12 times forward earnings. And that was before more recent trading took shares down closer to $48.00.

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Gilead Sciences, Inc. (NASDAQ: GILD) is another biotech giant that has seen its shares go into a state of hibernation despite a 2.8% gain to $69.75 on Tuesday with a market cap of $90 billion. Its earnings are not due until next week and the consensus was last seen at $1.64 EPS versus $1.60 a year earlier.

The driver for Gilead shares on Tuesday was actually after Citigroup reiterated its Buy rating and $106 price target. If that happens, Gilead will be back in the $100 billion market cap club. Unfortunately, Gilead has also had no real growth in recent years after its Hep-C treatment cured so many patients.

The Citi positive view on Gilead is based around the analyst seeing more drug trial data on its selonsertib treatment for nonalcoholic steatohepatitis (NASH) later in the quarter. Gilead has best been know for Hep-C and HIV drugs, and for cancer studies after its big Kite acquisition, but the company has been developing NASH treatments for years. The firm sees Gilead’s NASH business potentially taking 65% of the NASH market with peak sales of more than $4 billion as an offset to the decline in Hep-C prescriptions.

With shares at $69.75, the 52-week range of $60.32 to $88.33 doesn’t add up to much on first look. Still, its consensus analyst target price of $84.49 implies upside of just over 20% before considering its 3.3% dividend yield. Gilead’s consensus 2019 earnings per share estimate of $6.77 implies that it is barely valued at $10 times future earnings. That said, its $6.93 EPS expected for 2018 implied declining metrics as sales are called to be down less than 1% to $21.75 billion in 2019 after an expected 16% drop in 2018 from 2017.

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The most recent short interest data showed a mixed bag in Big Pharma short interest versus Big Biotech short interest activities. If you would have gone back a decade ago, and eliminated the great recession from the mix, would you have guessed that the three top biotech giants would be valued at lower multiples than their Big Pharma rivals? Sometimes the world looks like it has turned upside down if you only look at snapshots in time.

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