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Medical Product Stock Earnings Roster for Apr 25: LH & More

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The first-quarter earnings season saw a starry start with most of the 87 S&P 500 members beating earnings and maintaining revenue momentum as of Apr 20. However, the number of positive revenue surprises is lagging the preceding year’s numbers but is on par with the sequential figures.

Per the latest Earnings Preview, total earnings for the companies that have reported so far are up 25% year over year on 10.7% higher revenues. Of the total, 82.8% beat earnings and 67.8% surpassed revenue estimates. This week, 178 S&P 500 members are lined up to release their quarterly results. We expect to get a clearer picture of what the first-quarter earnings season has in the offing by the end of the week.

Medical Sector in a Snapshot

Medical, one of the 16 Zacks sectors, is expected to stand out this quarter. The sector benefits from favorable consumer behavior, growing prevalence of minimally-invasive surgeries, demand for liquid biopsy tests, use of IT for ensuring quick and improved patient care along with the shift of the payment system to a value-based model.

Broadly speaking, the latest Tax Cuts and Jobs Act, which among many other changes, slashed corporate tax rates to 21% from the earlier 35%, has also buoyed optimism among inventors.

The Medical Product space, which is part of the broader Medical sector, has been hogging a lot of limelight on certain favorable developments. Considering favorable demographics, changing market dynamics toward Artificial Intelligence (AI) & big-data applications, upbeat consumer sentiment and increased business investments, this sector has been going strong.

Further, the Senate’s decision to defer the implementation of an industry-wide excise tax for another couple of years, known as the Medical Device tax, has instilled confidence in investors. The tax will be put into effect on Jan 1, 2020. The bill also delays the so-called Cadillac tax, a 40% tax on employer insurance, until 2022.

Moreover, MedTech companies have been riding high on R&D innovation, growing consolidation and focus on emerging market.

Against this backdrop, let’s take a look at the major Medical Product stocks scheduled to release results on Apr 25:

Per the quantitative Zacks model, stocks with the advantageous combination of a solid Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP have higher chances of beating estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Laboratory Corporation of America Holdings (LH - Free Report) or LabCorp’s first-quarter 2018 results are expected to reflect gains from a strong LabCorp Diagnostics segment, favorable price and mix, tuck-in acquisitions along with organic volume.

The Zacks Consensus Estimate for earnings is pegged at $2.64, which indicates 18.92% year-over-year growth.

Further, we predict an earnings beat in the quarter as LabCorp has a Zacks Rank #2 and Earnings ESP of +1.52%. (Read more: Can LaunchPad Aid LabCorp's Covance Arm in Q1 Earnings?). You can see the complete list of today’s Zacks #1 Rank stocks here.

The stock surpassed the Zacks Consensus Estimate in all of the trailing four quarters, with an average beat of 2.9% as reflected in the chart below:

Laboratory Corporation of America Holdings Price and EPS Surprise

 

Thermo Fisher Scientific Inc.’s (TMO - Free Report) has been progressing well with its analytical instrument businesses on rising global demand. The company’s focus on growth through implementation of strategies and consolidation of product offerings is encouraging. These initiatives are likely to reflect in the first-quarter 2018 results.

The Zacks Consensus Estimate for earnings is pegged at $2.42, which shows 16.35% year-over-year growth.

However, it is difficult to conclusively predict an earnings beat as Thermo Fisher has a Zacks Rank #3 and Earnings ESP of -1.92%. (Read more: What's in the Offing for Thermo Fisher in Q1 Earnings?).

The stock surpassed the Zacks Consensus Estimate in all of the last four quarters, the average beat being 3.1% as seen in the chart below:

Thermo Fisher Scientific Inc. Price and EPS Surprise

 

Thermo Fisher Scientific Inc. Price and EPS Surprise | Thermo Fisher Scientific Inc. Quote

Boston Scientific Corporation (BSX - Free Report) has been gradually witnessing improving performance by Interventional Cardiology (IC), led by an innovative portfolio and efficient commercial teams globally. The WATCHMAN platform is set to see another stellar first-quarter 2018 on consistent global momentum as Boston Scientific’s efforts continue to drive growth.

The Zacks Consensus Estimate is pegged at 31 cents, which indicates 6.9% year-over-year growth.

Our model shows an earnings beat for Boston Scientific as it has a Zacks Rank #3 and Earnings ESP of +0.05%. (Read more: WATCHMAN to Aid Boston Scientific Q1 Earnings Amid Woes).

The stock beat the Zacks Consensus Estimate in one of the trailing four quarters, the average beat being a negative 0.03% as shown in the chart below:

Boston Scientific Corporation Price and EPS Surprise

 

Align Technology, Inc.’s (ALGN - Free Report) first-quarter 2018 results are likely to reflect gains from continued adoption of Invisalign Technology and a strong Scanner and Service business.

The Zacks Consensus Estimate for earnings is pegged at 98 cents, which reflects 15.3% year-over-year improvement.

We foresee a beat as Align Technology has a Zacks Rank #3 and Earnings ESP of +2.96%. (Read more: Can Steady Overall Growth Drive Align's Q1 Earnings?).

The stock trumped the Zacks Consensus Estimate in all of the trailing four quarters, with the average beat being 22.6% as seen in the chart below:

Align Technology, Inc. Price and EPS Surprise

 

Varian Medical Systems Inc.’s favorable revenue opportunity from various Oncology and Imaging Component products, growing adoption of Proton Therapy and strong overseas presence are likely to have influenced the company’s second-quarter fiscal 2018 results.

The Zacks Consensus Estimate for earnings is pinned at $1.03, which highlights 15.73% year-over-year rise.

However, we don’t see a beat for Varian as it has a Zacks Rank #3 and Earnings ESP of 0.00%. (Read more: Varian Medical Q2 Earnings: Is a Surprise in Store?).

The stock beat the Zacks Consensus Estimate in three of the trailing four quarters, with an average beat of 2.6% as demonstrated in the chart below:

Varian Medical Systems, Inc. Price and EPS Surprise

 

 

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