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We expect leading medical devices company – Medtronic (MDT - Analyst Report) to beat expectations when it reports third-quarter 2013 results on Feb 19.

Why a Likely Positive Surprise?

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

Positive Zacks ESP: Earnings ESP (Read: Zacks Earnings ESP: A Better Method), which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is at +2.20%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.

Zacks #2 Rank (Buy): Note that stocks with Zacks Ranks of #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. 

The combination of Medtronic’s Zacks Rank # 2 (Buy) and ESP  of +2.20% makes us very confident in looking for a positive earnings beat on Feb 19.

What is Driving the Better Than Expected Earnings?

Medtronic is enjoying market share gain on the back of the Resolute Integrity DES for the treatment of coronary artery disease. Other recently launched products are also contributing to overall growth. The company also reiterated its aim of returning 50% of free cash flow to shareholders and is targeting suitable acquisitions to augment growth. Meanwhile, Medtronic has increased its focus on the emerging markets and is targeting higher revenues from this region.

Other Stocks to Consider

Here are some other companies that warrant a look as these have the right ingredients to report possible earnings beat this quarter:

DENTSPLY International Inc. (XRAY - Analyst Report), Earnings ESP of +1.82% and Zacks Rank #3 (Hold)

DexCom, Inc. (DXCM - Analyst Report), Earnings ESP of +11.77% and Zacks Rank #3 (Hold)

Walgreen Co. (WAG - Analyst Report), Earnings ESP of +2.11% and Zacks Rank #3 (Hold).

 About Earnings ESP

Would you like to own more stocks likely to beat their next earnings report? And avoid stocks likely to disappoint?

If yes, then it’s time you learn about the Earnings ESP score available on Zacks.com.

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