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Anthem (ANTM) to Report Q3 Earnings: What's in the Cards?

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Anthem Inc. will release third-quarter 2020 results on Oct 28, before market open.

In the last reported quarter, the company’s earnings of $9.20 per share beat the Zacks Consensus Estimate by 4.9% on the back of Medicaid and Medicare businesses. Moreover, the bottom line jumped 98.3% year over year. However, Anthem’s operating revenues of $29.2 billion missed the Zacks Consensus Estimate by 0.9%. But the top line was up 15.9% year over year, aided by pharmacy product revenues in relation to the launch of IngenioRx. This increase was further led by higher premium revenues from growth in Medicaid and Medicare.

Let’s see how things are shaping up prior to the earnings announcement.

The company’s performance is likely to have taken a hit from escalating expenses and a weak Commercial business line. The Zacks Consensus Estimate for third-quarter bottom line stands at $4.04 billion, implying a 17% decline from the prior-year quarter’s reported number.

The consensus mark for Medical membership in Government business hints at a hike of 11.9% from the prior-year reported number while the same for Commercial business suggests a dip of 0.4%. Government business enrolment is likely to have offset the fall in commercial enrolment.

Management confirmed that the company will be making three federal tax payments and the $1.6-billion health insurer fee payment in the third quarter.

Anthem is likely to have sustained its share repurchase plan, which provided an additional cushion to its performance.

The consensus mark for Government business revenues indicates a 12.5% improvement from the year-earlier reported figure.

The Zacks Consensus Estimate for the to-be-reported quarter’s top line hints at a 12.7% increase from the year-ago quarter’s reported figure.
Expansion in Telehealth business might have also contributed to the favorable performances. This trend is likely to continue owing to demand for behavorial health. Moreover, the company is expected to have witnessed progress in organic growth in the to-be-reported quarter.

Further, the company is expected to have witnessed strength in Medicaid members on the back of contract wins.

Additionally, Anthem is likely to have benefited from a steady cash flow in the third quarter.

However, the company might have incurred heavy selling, general and administrative expenses as well as costs related to COVID-19 diagnosis.

What the Quantitative Model States

Our proven model doesn’t predict an earnings beat for Anthem this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates, which is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Anthem has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $4.04.

Anthem, Inc. Price and EPS Surprise

Anthem, Inc. Price and EPS Surprise

Anthem, Inc. price-eps-surprise | Anthem, Inc. Quote

Zacks Rank: Anthem carries a Zacks Rank #3, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Here are a few stocks worth considering from the medical sector with the perfect mix of elements to beat on earnings in the respective upcoming releases:

Select Medical Holdings Corporation (SEM - Free Report) has an Earnings ESP of +10.00% and a Zacks Rank # 2, currently. The company is scheduled to release third-quarter earnings on Oct 29.

Bausch Health Cos Inc. (BHC - Free Report) is set to report third-quarter earnings on Nov 3. The stock is currently a #3 Ranked player and has an Earnings ESP of +5.80%.

Canopy Growth Corporation (CGC - Free Report) is set to report third-quarter earnings on Nov 12. The stock presently has a Zacks Rank of 3 and an Earnings ESP of +7.55%.

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