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Teva Pharmaceutical Industries Limited (TEVA - Analyst Report) is scheduled to report second quarter 2014 results before the opening bell on Jul 31.

Why a Likely Positive Surprise?

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

Positive Zacks ESP: Teva has an Earnings ESP of +2.46%. This is a meaningful and leading indicator of a likely positive earnings surprise for the shares.

Zacks Rank: Teva carries a Zacks Rank #2 (Buy) which when combined with a +2.46% ESP makes us confident of an earnings beat.

Note that stocks with Zacks Rank #1, 2 and 3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

What is Driving the Better-than-Expected Earnings?

The company’s generic medicine segment should continue to perform well. Teva has successfully delayed the release of generic versions of its relapsing-remitting multiple sclerosis product, Copaxone to date. The product generated approximately $1.1 billion in worldwide sales in the first quarter of 2014, accounting for more than 21% of total revenues. Teva has submitted a citizen petition to the FDA related to the approvability of purported generic versions of Copaxone.

Meanwhile, cost-cutting initiatives at Teva should boost its bottom line.

Last quarter, Teva had posted a negative earnings surprise of 0.8%. However, the company had recorded positive earnings surprise in three consecutive quarters before that. In the trailing four quarters, the company recorded an average beat of 0.8%.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows these also have the right combination of elements to post an earnings beat this quarter:  

Acorda Therapeutics, Inc. (ACOR - Analyst Report) has an earnings ESP of +14.29% and carries a Zacks Rank #3. It is expected to report second-quarter results on Jul 31 before market opens.

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.

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

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