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Hospira Inc. (HSP - Analyst Report) is set to report its fourth quarter 2013 results on Feb 12 before the opening bell. Last quarter the company delivered an earnings surprise of +13.33%. Let’s see how things are shaping up for this announcement.

Growth Factors This Quarter

Hospira has delivered positive earnings surprises in the last four quarters with an average beat of 10.30%.

The U S Food and Drug Administration’s (FDA) warning letter related to manufacturing practice deficiencies at different manufacturing units of Hospira including the Rocky Mountains, Costa Rica, Illinois and India, will continue to put downward pressure on revenues in the fourth quarter of 2013.

Operating costs will increase in the final quarter of 2013 as Hospira is investing actively in its pipeline. Increased costs will hurt the bottom-line.

Earnings Whispers?

Our proven model does not conclusively show that Hospira is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Positive Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +2.00%.

Zacks Rank #4 (Sell): Hospira’s Zacks Rank #4 significantly lowers the predictive power of the ESP. We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements i.e., a positive Zacks Earnings ESP and a Zacks Rank #1, #2 or #3:

Actavis plc (ACT - Analyst Report) has an Earnings ESP of +0.33% and holds a Zacks Rank #2 (Buy). Actavis will be reporting fourth quarter earnings on Feb 20.

Shire (SHPG - Analyst Report) has an Earnings ESP of +0.99% and holds a Zacks Rank #2. Shire will be reporting fourth quarter earnings on Feb 13.

NuVasive, Inc. (NUVA - Snapshot Report) has an Earnings ESP of +11.11% and holds a Zacks Rank #1 (Strong Buy). NuVasive will be reporting fourth quarter earnings on Mar 3.

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