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Hospira Inc. (HSP - Analyst Report) is set to report its second-quarter 2014 results on Jul 30 before the opening bell.

Last quarter, the company had delivered a positive earnings surprise of 22.45%. We expect the company to beat expectations in the second quarter as well.

Why a Likely Positive Surprise?

Our proven model shows that Hospira is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +1.79%.

Zacks Rank #2 (Buy): Note that stocks with Zacks Rank #1, 2 and 3 have a significantly high chance of beating earnings estimates. Conversely, we caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revision momentum.

The combination of Hospira’s Zacks Rank #2 (Buy) and an earnings ESP of +1.79% makes us confident of an earnings beat on Jul 30.

What is Driving the Better-than-Expected Earnings?

Notably, Hospira has delivered positive earnings surprises in each of the last four quarters with an average beat of 11.41%.

Specialty Injectable Pharmaceuticals segment should witness strong sales and continue to boost the company’s top-line. We are positive on the company’s efforts in transitioning customers to its streamlined and modernized pump platforms. We believe these actions will positively impact Hospira’s results.

However, revenues in the Medication Management segment will remain under pressure until the issues are resolved completely.

According to media reports, Hospira is in talks with French entity Danone to buy the latter’s medical-nutrition unit and reincorporate overseas to save taxes. We keenly await Hospira’s second quarter conference call for confirmation of rumors on what could be the latest tax inversion deal in the healthcare sector.

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:

Endo International (ENDP - Analyst Report) has an Earnings ESP of +1.11% and carries a Zacks Rank #2. Endo will report second quarter earnings on Jul 31 before market opens.

Mallinckrodt (MNK - Analyst Report) has an Earnings ESP of +2.33% and holds a Zacks Rank #1 (Strong Buy). Mallinckrodt will report third quarter earnings on Aug 7 before market opens.

Impax Laboratories (IPXL - Snapshot Report) has an Earnings ESP of +26.83% and holds a Zacks Rank #3 (Hold). Impax will report second quarter earnings on Aug 6 before market opens.

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