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Pacific Biosciences (PACB): What Awaits in Q1 Earnings?

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Headquartered in Menlo Park, CA, Pacific Biosciences of California Inc. (PACB - Free Report) is scheduled to report first-quarter 2017 results on Apr 20.

Pacific Biosciences has an impressive track of comfortably beating estimates in each of the four trailing quarters. In the last reported quarter, the company delivered a positive earnings surprise of 8.70%, bringing the four-quarter average to 5.61%. Let’s see how things are shaping up prior to this announcement.
 

Factors Influencing First Quarter

Management is apprehensive that first-quarter performance would be affected by lower instrument bookings that may result in a decline in backlog. Given the above-mentioned reasons, management is apprehensive that revenues will sequentially decline.

However, first-quarter revenues are expected to grow significantly on a year-over-year basis. Further the company forecasts a 15% rise in operating expenses from the year-ago quarter.

Overall, the company’s activities during the January–March period were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the first quarter deteriorated to a loss of 23 cents from a loss of 22 cents per share over the last 30 days.    

We note that Pacific Biosciences outperformed the Zacks Medical Instruments sub-industry in the last one month. While the stock returned 2.97%, the sub-industry lost 3.81%.

Earnings Whispers

Our proven model does not conclusively show that Pacific Biosciences is likely to beat the Zacks Consensus Estimate 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 as you will see below.

Zacks ESP:  The Earnings ESP for Pacific Biosciences is +8.70%. This is because the Most Accurate estimate stands at a loss of 21 cents while the Zacks Consensus Estimate is pegged at a loss of 23 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Pacific Biosciences carries a Zacks Rank #4, which decreases the predictive power of ESP. Also, we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
 
Stocks That Warrant a Look

Here are some medical stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.

Applied Materials, Inc. (AMAT - Free Report) has an Earnings ESP of +1.32% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Chemours Company (CC - Free Report) has an Earnings ESP of +4.08% and a Zacks Rank #1.

Hill-Rom Holdings, Inc. has an Earnings ESP of +1.27% and a Zacks Rank #2.

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