Healthcare is performing well with the start of the New Year thanks to encouraging industry trends and a favorable policy environment. Notably, popular ETFs like Health Care Select Sector SPDR Fund (XLV – Free Report) , 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) have gained nearly 7% so far.

The bullish trend is likely to continue heading into the Q4 earnings season as some big names like Johnson and Johnson (JNJ – Free Report) , 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 38.4% share in XLV, 36.9% in IYH, 33.2% in VHT and 33.2% 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 the 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 of These Stocks

JNJ has a Zacks Rank #3 and an Earnings ESP of -0.09%, indicating a lower chance of beating estimates this quarter. The stock has seen no earnings estimate revision for the yet-to-be-reported quarter but delivered an average negative earnings surprise of 3.12% for the past four quarters. It has an impressive Momentum Style Score of B and a Value and Growth Style Score of C each. Johnson and Johnson is slated to release its earnings on Jan 23 before the opening bell.