The Q3 earnings season is gradually picking up pace and as per our latest Earnings Trends report, as of Oct 19, 81 S&P 500 members (16.2% of the total index) have reported their quarterly numbers. So far, the earnings reports demonstrated quite an optimistic trend and if this continues till the end, this quarter will finally be successful in showing positive earnings growth for the first time after five back-to-back quarters of earnings declines for the S&P 500 index.
Total earnings are up 3.8% year over year for these 81 S&P 500 members on a beat ratio of 80.2%. Revenues have increased 3.6%, with 63% of the companies beating expectations.
With the majority of earnings yet to be released, the ongoing week with huge earnings announcements lined up, will be crucial for deciding whether this Q3 will genuinely prove itself to be a trend-changing quarter. Irrespective of the outcome, there is some definite good news for investors keen on the Medical sector.
As per the report, Medical is one of the 8 broader sectors among the 16 Zacks sectors which are expected to report earnings growth in Q3. The sector is expected to deliver 3.7% earnings growth on the back of 7.4% higher revenues in the quarter.
What’s in Store for the Med-Product Space?
Medical product, a niche area under the medical device subcategory within the broader Medical sector, holds a lot of promise at this moment. The powerful long-term tailwinds, including mergers & acquisitions, emerging market expansion, positive demographic trends and new product innovation have been the vital force behind the continued uptrend of the sector’s performance. Another contributing factor has been the temporary two-year suspension of the controversial and dreadful 2.3% medical device excise tax which took a toll on the entire MedTech industry since its enactment in 2013.
In addition, the recent change in consumer demand and market dynamics led to a dramatic transformation in the entire healthcare system. This is evident from the growing prevalence of minimally invasive surgeries, rising demand for liquid biopsy tests, use of IT for ensuring quick and improved patient care, and the shift of the payment system to a value-based model among others.
Let’s take a look at the major Medical product stocks expected to release their third-quarter 2016 reports on Oct 24:
Endologix Inc.
This medical product company develops and manufactures minimally invasive treatments for aortic disorders. The company particularly focuses on endovascular stent grafts for the treatment of abdominal aortic aneurysms (AAA).
However, our proven model does not conclusively show that Endologix is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here.
Endologix currently has a Zacks Rank #4 (Sell) and an Earnings ESP of -14.29%. That is because the Most Accurate estimate stands lower at a loss of 16 cents compared to the Zacks Consensus Estimate of a loss of 14 cents. We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Vascular Solutions Inc.
This medical device company develops advanced clinical solutions for coronary and peripheral vascular procedures. So far, it has launched more than 100 products offered to interventional cardiologists, interventional radiologists, electrophysiologists, and vein specialists in the U.S. and internationally.
Our proven model does not conclusively show that Vascular Solutions is likely to beat earnings this quarter as it has an Earnings ESP of 0.00% along with a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.However, the company’s trailing 12-month average surprise came in at a positive 12.23%.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>
Image: Bigstock
Medical Product Stocks' Oct 24 Earnings Preview: ELGX, VASC
The Q3 earnings season is gradually picking up pace and as per our latest Earnings Trends report, as of Oct 19, 81 S&P 500 members (16.2% of the total index) have reported their quarterly numbers. So far, the earnings reports demonstrated quite an optimistic trend and if this continues till the end, this quarter will finally be successful in showing positive earnings growth for the first time after five back-to-back quarters of earnings declines for the S&P 500 index.
Total earnings are up 3.8% year over year for these 81 S&P 500 members on a beat ratio of 80.2%. Revenues have increased 3.6%, with 63% of the companies beating expectations.
With the majority of earnings yet to be released, the ongoing week with huge earnings announcements lined up, will be crucial for deciding whether this Q3 will genuinely prove itself to be a trend-changing quarter. Irrespective of the outcome, there is some definite good news for investors keen on the Medical sector.
As per the report, Medical is one of the 8 broader sectors among the 16 Zacks sectors which are expected to report earnings growth in Q3. The sector is expected to deliver 3.7% earnings growth on the back of 7.4% higher revenues in the quarter.
What’s in Store for the Med-Product Space?
Medical product, a niche area under the medical device subcategory within the broader Medical sector, holds a lot of promise at this moment. The powerful long-term tailwinds, including mergers & acquisitions, emerging market expansion, positive demographic trends and new product innovation have been the vital force behind the continued uptrend of the sector’s performance. Another contributing factor has been the temporary two-year suspension of the controversial and dreadful 2.3% medical device excise tax which took a toll on the entire MedTech industry since its enactment in 2013.
In addition, the recent change in consumer demand and market dynamics led to a dramatic transformation in the entire healthcare system. This is evident from the growing prevalence of minimally invasive surgeries, rising demand for liquid biopsy tests, use of IT for ensuring quick and improved patient care, and the shift of the payment system to a value-based model among others.
Let’s take a look at the major Medical product stocks expected to release their third-quarter 2016 reports on Oct 24:
Endologix Inc.
This medical product company develops and manufactures minimally invasive treatments for aortic disorders. The company particularly focuses on endovascular stent grafts for the treatment of abdominal aortic aneurysms (AAA).
However, our proven model does not conclusively show that Endologix is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here.
Endologix currently has a Zacks Rank #4 (Sell) and an Earnings ESP of -14.29%. That is because the Most Accurate estimate stands lower at a loss of 16 cents compared to the Zacks Consensus Estimate of a loss of 14 cents. We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
ENDOLOGIX INC Price and Consensus
ENDOLOGIX INC Price and Consensus | ENDOLOGIX INC Quote
Vascular Solutions Inc.
This medical device company develops advanced clinical solutions for coronary and peripheral vascular procedures. So far, it has launched more than 100 products offered to interventional cardiologists, interventional radiologists, electrophysiologists, and vein specialists in the U.S. and internationally.
Our proven model does not conclusively show that Vascular Solutions is likely to beat earnings this quarter as it has an Earnings ESP of 0.00% along with a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.However, the company’s trailing 12-month average surprise came in at a positive 12.23%.
VASCULAR SOLUTN Price and Consensus
VASCULAR SOLUTN Price and Consensus | VASCULAR SOLUTN Quote
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>