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After ISRG Q1 Earnings, 3 Medical Instrument Stocks Looking Up
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The first-quarter earnings season has commenced on an encouraging note for most sectors. Per the latest Earnings Preview, the first-quarter earnings for the S&P 500 companies are expected to be up 7.6% from the year-ago quarter on 6.3% growth in revenues.
Unfavorably, the Medical sector is likely to be among the worst performers of the 16 Zacks sectors, with earnings expected to decrease 0.6% versus growth of 4.5% in the preceding quarter (year-over-year basis). Margins are also expected to decline 0.7% from the year-ago quarter.
On the brighter side, the new format of the ‘Trump-care’ (AHCA) with the proposal of Patient and State Stability Fund (PSSF) amendment looks optimistic for the medical space at the moment. Per the postulates of the PSSF, the government would set aside $15 billion as a ‘risk-sharing’ program to provide payments to health insurers for individual claims of the prospective patients.
We believe the sharing of the cost burden by the government would result in lower premiums. Furthermore, this would pave way for the insurance companies to provide services to maximum people in need.
Undoubtedly, the promising approach of the new ‘Trump-care’ regime (if brought into being) would immediately result in broadening of customer base for the Medical Instrument companies as well, who could have otherwise suffered (owing to their exorbitant products and services).
On a dismal note, the medical instrument companies liked the old template of AHCA as well, as it promised to repeal the infamous 2.3% medical device tax. While the old proposal failed to gather support in the House, thanks to solid opposition from both conservative and moderate lawmakers, the fraternity is currently worried whether the final plan will still call for the repealing of the medical device tax.
Meanwhile, the Zacks classified Medical Instrument industry traded below the S&P 500 over the last one year. The industry gained roughly 2%, way lower than the S&P 500’s return of 11.4%. Furthermore, a weak industry rank (bottom 42% of more than 250 industries) raises investor concern.
Intuitive Surgical Broke the Ice
In the wake of such a volatile backdrop, Intuitive Surgical Inc. (ISRG - Free Report) , a bigwig in the niche space, reported its earnings results on Tuesday, registering stellar year-over-year growth.
Notably, the company posted adjusted earnings of $4.67 per share, up 27.2% on the back of 13.3% growth in revenues (year over year). Adjusted earnings of this medical instrument stock crushed the Zacks Consensus Estimate of $3.97.
Intuitive Surgical’s performance in the quarter was backed by solid international growth. Per management, the company posted revenues of $183 million outside the U.S., up 12% from the first quarter of 2016. The company placed 56 system orders, compared with 36 in the year-ago quarter and 63 in the fourth quarter. These included 21 orders in Europe, seven in Korea, six in India, six in Japan and two in China.
Intuitive Surgical shares gained 21.4% in the last year.
3 Medical Instruments Stocks in Focus
While the Medical Instrument industry has been oscillating between hope and despair, Intuitive Surgical’s impressive earnings performance instills investor confidence. Meanwhile, let us take a look at three other stocks from the sector, which are expected to put up an impressive show this earnings season. Notably, we have zeroed in on companies with strong fundamentals, a favorable Zacks Rank and a significant share of overseas business.
Inogen Inc. (INGN - Free Report) develops, manufactures and markets portable oxygen concentrators (POC). POCs are used by patients who suffer from chronic respiratory conditions and need long-term oxygen therapy.
Of the major positives, revenues at Inogen multiplied at a CAGR of 39.4% over the last four years. Notably, the stock sports a Zacks Rank #1 (Strong Buy).
The company is expected to release its first-quarter results on May 8. The Zacks Consensus Estimate for adjusted earnings is currently pegged at 12 cents per share, a penny higher than what the company had recorded in the year-ago quarter.
Inogen generates a significant portion of its revenues from international markets. In fiscal 2016, the company’s business-to-business international sales accounted for almost 25% of net revenues, increasing 41.8% on a year-over-year basis.
Over the last year, the stock added 55.8%.
Masimo Corporation (MASI - Free Report) develops, manufactures and markets a family of non-invasive monitoring systems.
This Zacks Rank #2 (Buy) stock has a compelling growth story with revenues and adjusted earnings multiplying at CAGR of 9% and 18%, respectively, over the last four years. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company is scheduled to report first-quarter results on May 3, after the closing bell. The Zacks Consensus Estimate for first-quarter earnings is 60 cents per share, up from 53 cents in the year-ago quarter.
Masimo’s top line has been leveraging on its international operations for long. In fact, the stock gained considerably in fiscal 2016, especially outside the U.S. as total international sales jumped nearly 12%, with Latin America and Asia showcasing solid growth.
The stock represented a stellar return of 119% over the last year.
Teleflex Incorporated (TFX - Free Report) designs, develops, manufactures, and supplies single-use medical devices for common diagnostic and therapeutic procedures in critical care and surgical applications worldwide.
The Zacks Rank #2 stock has strong fundamentals as well. Teleflex’s revenues multiplied at a CAGR of 4.8%, while adjusted earnings jumped 14.1% over the last five years.
The company is expected to report first-quarter results on Apr 27. Meanwhile, the Zacks Consensus Estimate for adjusted earnings is pegged at $1.67, 15 cents higher than what the company had posted in the year-ago quarter.
Teleflex has strong overseas business. In the last reported quarter, revenues from Europe, Middle East and Africa expanded 3% on a constant currency basis to $135.7 million. The improvement in European revenue was largely driven by increased sales in the company’s urology, interventional, vascular, and respiratory products. Notably, China continues to be an important area of growth for Teleflex.
Teleflex gained almost 26% in the last year.
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Image: Bigstock
After ISRG Q1 Earnings, 3 Medical Instrument Stocks Looking Up
The first-quarter earnings season has commenced on an encouraging note for most sectors. Per the latest Earnings Preview, the first-quarter earnings for the S&P 500 companies are expected to be up 7.6% from the year-ago quarter on 6.3% growth in revenues.
Unfavorably, the Medical sector is likely to be among the worst performers of the 16 Zacks sectors, with earnings expected to decrease 0.6% versus growth of 4.5% in the preceding quarter (year-over-year basis). Margins are also expected to decline 0.7% from the year-ago quarter.
On the brighter side, the new format of the ‘Trump-care’ (AHCA) with the proposal of Patient and State Stability Fund (PSSF) amendment looks optimistic for the medical space at the moment. Per the postulates of the PSSF, the government would set aside $15 billion as a ‘risk-sharing’ program to provide payments to health insurers for individual claims of the prospective patients.
We believe the sharing of the cost burden by the government would result in lower premiums. Furthermore, this would pave way for the insurance companies to provide services to maximum people in need.
Undoubtedly, the promising approach of the new ‘Trump-care’ regime (if brought into being) would immediately result in broadening of customer base for the Medical Instrument companies as well, who could have otherwise suffered (owing to their exorbitant products and services).
On a dismal note, the medical instrument companies liked the old template of AHCA as well, as it promised to repeal the infamous 2.3% medical device tax. While the old proposal failed to gather support in the House, thanks to solid opposition from both conservative and moderate lawmakers, the fraternity is currently worried whether the final plan will still call for the repealing of the medical device tax.
Meanwhile, the Zacks classified Medical Instrument industry traded below the S&P 500 over the last one year. The industry gained roughly 2%, way lower than the S&P 500’s return of 11.4%. Furthermore, a weak industry rank (bottom 42% of more than 250 industries) raises investor concern.
Intuitive Surgical Broke the Ice
In the wake of such a volatile backdrop, Intuitive Surgical Inc. (ISRG - Free Report) , a bigwig in the niche space, reported its earnings results on Tuesday, registering stellar year-over-year growth.
Notably, the company posted adjusted earnings of $4.67 per share, up 27.2% on the back of 13.3% growth in revenues (year over year). Adjusted earnings of this medical instrument stock crushed the Zacks Consensus Estimate of $3.97.
Intuitive Surgical’s performance in the quarter was backed by solid international growth. Per management, the company posted revenues of $183 million outside the U.S., up 12% from the first quarter of 2016. The company placed 56 system orders, compared with 36 in the year-ago quarter and 63 in the fourth quarter. These included 21 orders in Europe, seven in Korea, six in India, six in Japan and two in China.
Intuitive Surgical shares gained 21.4% in the last year.
3 Medical Instruments Stocks in Focus
While the Medical Instrument industry has been oscillating between hope and despair, Intuitive Surgical’s impressive earnings performance instills investor confidence. Meanwhile, let us take a look at three other stocks from the sector, which are expected to put up an impressive show this earnings season. Notably, we have zeroed in on companies with strong fundamentals, a favorable Zacks Rank and a significant share of overseas business.
Inogen Inc. (INGN - Free Report) develops, manufactures and markets portable oxygen concentrators (POC). POCs are used by patients who suffer from chronic respiratory conditions and need long-term oxygen therapy.
Of the major positives, revenues at Inogen multiplied at a CAGR of 39.4% over the last four years. Notably, the stock sports a Zacks Rank #1 (Strong Buy).
The company is expected to release its first-quarter results on May 8. The Zacks Consensus Estimate for adjusted earnings is currently pegged at 12 cents per share, a penny higher than what the company had recorded in the year-ago quarter.
Inogen generates a significant portion of its revenues from international markets. In fiscal 2016, the company’s business-to-business international sales accounted for almost 25% of net revenues, increasing 41.8% on a year-over-year basis.
Over the last year, the stock added 55.8%.
Masimo Corporation (MASI - Free Report) develops, manufactures and markets a family of non-invasive monitoring systems.
This Zacks Rank #2 (Buy) stock has a compelling growth story with revenues and adjusted earnings multiplying at CAGR of 9% and 18%, respectively, over the last four years. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company is scheduled to report first-quarter results on May 3, after the closing bell. The Zacks Consensus Estimate for first-quarter earnings is 60 cents per share, up from 53 cents in the year-ago quarter.
Masimo’s top line has been leveraging on its international operations for long. In fact, the stock gained considerably in fiscal 2016, especially outside the U.S. as total international sales jumped nearly 12%, with Latin America and Asia showcasing solid growth.
The stock represented a stellar return of 119% over the last year.
Teleflex Incorporated (TFX - Free Report) designs, develops, manufactures, and supplies single-use medical devices for common diagnostic and therapeutic procedures in critical care and surgical applications worldwide.
The Zacks Rank #2 stock has strong fundamentals as well. Teleflex’s revenues multiplied at a CAGR of 4.8%, while adjusted earnings jumped 14.1% over the last five years.
The company is expected to report first-quarter results on Apr 27. Meanwhile, the Zacks Consensus Estimate for adjusted earnings is pegged at $1.67, 15 cents higher than what the company had posted in the year-ago quarter.
Teleflex has strong overseas business. In the last reported quarter, revenues from Europe, Middle East and Africa expanded 3% on a constant currency basis to $135.7 million. The improvement in European revenue was largely driven by increased sales in the company’s urology, interventional, vascular, and respiratory products. Notably, China continues to be an important area of growth for Teleflex.
Teleflex gained almost 26% in the last year.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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