After a ho-hum fourth-quarter earnings season, investors are on the edge of their seats for the first quarter. The start of 2016 was mired by macroeconomic issues like wildly swinging oil prices and a slowdown in China. The volatility which was sparked off in the second half of 2015 by Democratic Presidential candidate Hillary Clinton’s price gouging tweet continued to plague the biotech sector in 2016 as well. The NYSE ARCA Biotech Index (^BTK) and NASDAQ Biotechnology Index (^NBI) have declined 11.6% and 12.0%, respectively, so far this year. Notwithstanding the decline, things surely look far better now than they did a couple of months back. Last week, Biogen Inc. (BIIB) reported better-than-expected earnings for the first quarter of 2016 even though revenues fell short of expectations. It has been a busy year so far for the biotech sector. M&A and licensing deals continue to be a key area of focus with Shire (SHPG) announcing the acquisition of Baxalta Inc. (BXLT) for $32 billion right at the onset of 2016. The acquisition is expected to close by mid-year. And last week, rumors of AstraZeneca (AZN) making a bid for Xtandi maker Medivation (MDVN) surfaced. Meanwhile, new product approvals along with label expansion of existing drugs and regular pipeline updates for key drugs kept investors’ attention glued to the sector. Earlier in the month, the FDA’s Gastrointestinal Drugs Advisory Committee voted unanimously in favor of Intercept Pharmaceuticals’ (ICPT) lead pipeline candidate, Ocaliva (obeticholic acid) while AbbVie along with partner Roche (RHHBY) received accelerated approval for oncology drug Venclexta (venetoclax) for previously treated chronic lymphocytic leukemia with a 17p deletion. On the other hand, BioMarin Pharmaceutical Inc. (BMRN) was dealt a blow when the company received a Complete Response Letter for Kyndrisa for the treatment of Duchenne muscular dystrophy (DMD) amenable to exon 51 skipping. Sucampo Pharmaceuticals, Inc. (SCMP) too slumped recently when a phase II study on pipeline candidate, cobiprostone, failed to meet the primary endpoint in a trial on patients with non-erosive reflux disease or symptomatic gastroesophageal reflux disease. Nevertheless, given the strong fundamentals, healthy pipelines and the drive to find innovative treatments for rare diseases, the happening biotech sector should be a good bet for investors. Here we help you to identify some companies in the biotech sector that have the potential to beat earnings in their upcoming releases. These stocks are well positioned in today’s market environment, and could see considerable upside riding on the aforementioned trends. An earnings beat should help these stocks gain investor confidence and show a favorable price movement. How to Pick? Given a large number of industry participants, pinpointing stocks that have the potential to beat estimates could appear to be a daunting task. But our proprietary methodology makes it fairly simple. One way to narrow down the list of choices this earnings season is by looking at stocks that have the combination of a favorable Zacks Rank – Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) – and a positive Earnings ESP . Earnings ESP is our proprietary methodology for identifying stocks that have high chances of surprising in their next earnings announcement. It shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%. Below are five biotech stocks we believe are best positioned to stand out as we take a stand in the ongoing earnings season: Biotech bigwig, Gilead Sciences (GILD) carries a Zacks Rank #2 with an Earnings ESP of +1.65%. Gilead's key areas of focus include human immunodeficiency virus (HIV), liver diseases such as chronic hepatitis C virus (HCV) infection and chronic hepatitis B virus (HBV) infection, cardiovascular, hematology/oncology and inflammation/respiratory. The company is a leader in the HCV market with key drugs like Sovaldi and Harvoni. The company has an excellent track record and registered positive earnings surprises in the last four quarters with an average beat of 7.8%. The company is expected to report first-quarter results on Apr 28. Seattle Genetics, Inc. (SGEN) is also looking up this season with a Zacks Rank #3 with an Earnings ESP of +63.64%. Seattle Genetics primarily focuses on the development and commercialization of therapies targeted for the treatment of cancer. The company’s only marketed product, Adcetris, is approved for relapsed Hodgkin lymphoma and relapsed systemic anaplastic large cell lymphoma. The company is expected to report first-quarter results on Apr 28. BioMarin Pharmaceutical Inc. (BMRN) carries a Zacks Rank #3 with an Earnings ESP of +22.35%. The company's product portfolio comprises five marketed products, namely, Aldurazyme, Naglazyme, Kuvan, Firdapse and Vimizim. The company is expected to report first-quarter results on Apr 28. AbbVie Inc. (ABBV) carries a Zacks Rank #3 with an Earnings ESP of +1.77%. The company has a presence in the rheumatoid arthritis, cancer, HIV, HCV, testosterone, Parkinson’s disease, ulcerative colitis, and chronic kidney disease markets. AbbVie’s flagship product Humira is approved for several indications like rheumatoid arthritis (moderate to severe), Crohn’s disease (moderate to severe) and ulcerative colitis (moderate to severe), among others. The company has an impressive track record with an average earnings beat of 4.85%. The company is expected to report first-quarter results on Apr 28. Amgen Inc. (AMGN) carries a Zacks Rank #3 with an Earnings ESP of +2.56%. Amgen has a strong presence in the supportive cancer care, nephrology and autoimmune disease markets with drugs like Enbrel, Neulasta, Epogen, and Neupogen among others. The company has an excellent track record and registered positive earnings surprises in the last four quarters with an average beat of 13.7%. The company is expected to report first-quarter results on Apr 28. Bottom Line Although hurdles remain in the form of biosimilars and currency headwinds, investors would do well to keep an eye on these potential outperformers given their solid Zacks Rank and positive Zacks Earnings ESP. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report GILEAD SCIENCES (GILD): Free Stock Analysis Report SEATTLE GENETIC (SGEN): Free Stock Analysis Report BIOMARIN PHARMA (BMRN): Free Stock Analysis Report ABBVIE INC (ABBV): Free Stock Analysis Report AMGEN INC (AMGN): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research