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3 MedTech Stocks Likely to Top Estimates This Earnings Season
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Fourth-quarter results of Medical Products companies within the broader Medical sector are expected to reflect strong rebound in procedure volume as a result of pent-up demand. This basically is the consequence of subdued consumer spending in the form of deferral of non-elective and non-COVID medical care through the earlier months of the pandemic.
Added to this, this sector’s several new COVID-19-related healthcare support products are expected to have performed well, thus contributing to Q4 performance.Though it was initially assumed that once vaccines are rolled out, the demand for testing will decline, the resurgence in cases through the fourth quarter has put the focus back on the testing space.
Per the latest Earnings Outlook, Medical is one of the six among the 16 major Zacks sectors set to report year-over-year revenue growth. The sector is expected to report 8.2% earnings growth and revenue growth of 11.4% this time around.
However, both the earnings and revenue projections indicate a decline from the third-quarter 2020 scorecard, which reflected earnings growth of 15.1% on 11.8% revenue growth. This sequential slack, we believe, is likely to have stemmed from the last two months of Q4 that witnessed the emergence of new strains of coronavirus that are claimed to be 56% more contagious.
The Zacks Medical Product sector has witnessed an increase of 2.6% in the past year. It currently carries a Zacks Sector Rank in the bottom 14% (218 out of 256 industries).
Three Major Q4 Trends
COVID-19-Related Developments Generate Revenues: In the fourth quarter, the FDA granted Emergency Use Authorization (EUA) to Ellume Health’s COVID-19 Home Test as the first over-the-counter fully at-home diagnostic test. Abbott (ABT - Free Report) , which reported its fourth-quarter results on Jan 27, noted that the biggest contribution in the fourth quarter came from its rapid lateral flow test to detect the virus, which includes BinaxNOW in the United States and Panbio antigen test internationally. Competing against Abbott’s rapid antigen test, Quidel Corporation (QDEL - Free Report) also gained EUA for its QuickVue SARS Antigen test. This too is expected to have contributed strongly to the company’s performance in the fourth quarter, the results of which will be announced on Feb 10. Again, Becton, Dickinson and Company or BD's (BDX - Free Report) Veritor antigen test claimed to directly compete with Quidel’s Sofia kit. It too is expected to have witnessed strong adoption in Q4.
ResMed (RMD - Free Report) , a major player in the field of sleep disorder breathing reported its second-quarter fiscal 2021 results on Jan 28. Through the reported quarter, the company saw improvements in patient flow even as second and third waves of the infection came through Northern Hemisphere nations. This was because physicians and providers adopted digital health, which enabled patient engagement.
Base Business Improvement Following Initial Growth Disruption: MedTech companies’ collective business growth is expected to have shown strong signs of rebound in base sales volumes in Q4 as companies have finally started to meet the pent-up demand. Mainly sectors like cardiac and vascular, neuromodulation, minimally invasive and non-invasive surgeries as well as orthopedic procedures are expected to have benefited from this huge pent-up demand of the past several months in the fourth quarter. Also, companies that invested in virtual physician education, remote clinical support and digital sales enablement suitable for healthcare support amid the pandemic are expected to have witnessed huge market adoption of their COVID-19-related healthcare-support products and services in the fourth quarter.
Global Supply Chain Disruption Mars Growth: The last two months of the fourth quarter were crucial for the world economy on a whole. Despite theextensive rollout of vaccines, the U.K. stepped into the third lockdown to restrict the spread of the new strain of the virus. In the United States, limited restrictions were imposed on a regional basis and world trade once again got jeopardized, breaking the global supply chain. Companies with a huge international base were among the hardest hit due to the imposition of these restrictions. Boston Scientific, which has a strong global base, might once again have witnessed a notable reduction in product demand across each of its core business segments and geographies.
Zacks Methodology
Given the high degree of diversity in the Medical Products industry, finding the right stocks with the potential to beat estimates might be quite a daunting task.
However, our proprietary Zacks methodology makes this fairly simple.
Our research shows that for stocks with this combination, chances of an earnings surprise are as high as 70%.
Earnings ESP provides the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here we present three stocks that are expected to beat earnings estimates in this reporting cycle.
Meridian Bioscience : The company’s Life Science division that has a comprehensive portfolio of antigens, antibodies and molecular reagents for in-vitro diagnostics are expected to report strong results.
The combination of Meridian Bioscience’s Earnings ESP of +3.94% and a Zacks Rank #2 raises the possibility of an earnings surprise in the to-be-reported quarter.
The company is scheduled to release results for the first quarter of fiscal 2021 on Feb 5, before market open.
DENTSPLY SIRONA (XRAY - Free Report) : DENTSPLY SIRONA expects sustained improvement in sales trends with dental offices reopening and rise in patient visits in the fourth quarter. The company’s execution of additional restructuring actions too is expected to have contributed to its revenue growth and margin expansion in the fourth quarter.
The company is scheduled to release fourth-quarter 2020 results on Mar 1.
DENTSPLY SIRONA has an Earnings ESP of +4.45% and a Zacks Rank #2.
Patterson Companies, Inc. (PDCO - Free Report) : The company is expected to have gained from its new private label brand, Pivotal. Further, reopening of dental practices after widespread shutdown is expected to have driven demand for the company’s broad array of products and value-added services. This is expected to have boosted the company’s third-quarter fiscal 2021 revenues.
Pattersonis scheduled to report its fiscal third-quarter results on Feb 25. It has an Earnings ESP of +1.96% and a Zacks Rank #2.
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
3 MedTech Stocks Likely to Top Estimates This Earnings Season
Fourth-quarter results of Medical Products companies within the broader Medical sector are expected to reflect strong rebound in procedure volume as a result of pent-up demand. This basically is the consequence of subdued consumer spending in the form of deferral of non-elective and non-COVID medical care through the earlier months of the pandemic.
Added to this, this sector’s several new COVID-19-related healthcare support products are expected to have performed well, thus contributing to Q4 performance.Though it was initially assumed that once vaccines are rolled out, the demand for testing will decline, the resurgence in cases through the fourth quarter has put the focus back on the testing space.
Per the latest Earnings Outlook, Medical is one of the six among the 16 major Zacks sectors set to report year-over-year revenue growth. The sector is expected to report 8.2% earnings growth and revenue growth of 11.4% this time around.
However, both the earnings and revenue projections indicate a decline from the third-quarter 2020 scorecard, which reflected earnings growth of 15.1% on 11.8% revenue growth. This sequential slack, we believe, is likely to have stemmed from the last two months of Q4 that witnessed the emergence of new strains of coronavirus that are claimed to be 56% more contagious.
The Zacks Medical Product sector has witnessed an increase of 2.6% in the past year. It currently carries a Zacks Sector Rank in the bottom 14% (218 out of 256 industries).
Three Major Q4 Trends
COVID-19-Related Developments Generate Revenues: In the fourth quarter, the FDA granted Emergency Use Authorization (EUA) to Ellume Health’s COVID-19 Home Test as the first over-the-counter fully at-home diagnostic test. Abbott (ABT - Free Report) , which reported its fourth-quarter results on Jan 27, noted that the biggest contribution in the fourth quarter came from its rapid lateral flow test to detect the virus, which includes BinaxNOW in the United States and Panbio antigen test internationally. Competing against Abbott’s rapid antigen test, Quidel Corporation (QDEL - Free Report) also gained EUA for its QuickVue SARS Antigen test. This too is expected to have contributed strongly to the company’s performance in the fourth quarter, the results of which will be announced on Feb 10. Again, Becton, Dickinson and Company or BD's (BDX - Free Report) Veritor antigen test claimed to directly compete with Quidel’s Sofia kit. It too is expected to have witnessed strong adoption in Q4.
ResMed (RMD - Free Report) , a major player in the field of sleep disorder breathing reported its second-quarter fiscal 2021 results on Jan 28. Through the reported quarter, the company saw improvements in patient flow even as second and third waves of the infection came through Northern Hemisphere nations. This was because physicians and providers adopted digital health, which enabled patient engagement.
Base Business Improvement Following Initial Growth Disruption: MedTech companies’ collective business growth is expected to have shown strong signs of rebound in base sales volumes in Q4 as companies have finally started to meet the pent-up demand. Mainly sectors like cardiac and vascular, neuromodulation, minimally invasive and non-invasive surgeries as well as orthopedic procedures are expected to have benefited from this huge pent-up demand of the past several months in the fourth quarter. Also, companies that invested in virtual physician education, remote clinical support and digital sales enablement suitable for healthcare support amid the pandemic are expected to have witnessed huge market adoption of their COVID-19-related healthcare-support products and services in the fourth quarter.
Global Supply Chain Disruption Mars Growth: The last two months of the fourth quarter were crucial for the world economy on a whole. Despite theextensive rollout of vaccines, the U.K. stepped into the third lockdown to restrict the spread of the new strain of the virus. In the United States, limited restrictions were imposed on a regional basis and world trade once again got jeopardized, breaking the global supply chain. Companies with a huge international base were among the hardest hit due to the imposition of these restrictions. Boston Scientific, which has a strong global base, might once again have witnessed a notable reduction in product demand across each of its core business segments and geographies.
Zacks Methodology
Given the high degree of diversity in the Medical Products industry, finding the right stocks with the potential to beat estimates might be quite a daunting task.
However, our proprietary Zacks methodology makes this fairly simple.
We are focusing on stocks that have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Our research shows that for stocks with this combination, chances of an earnings surprise are as high as 70%.
Earnings ESP provides the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here we present three stocks that are expected to beat earnings estimates in this reporting cycle.
Meridian Bioscience : The company’s Life Science division that has a comprehensive portfolio of antigens, antibodies and molecular reagents for in-vitro diagnostics are expected to report strong results.
The combination of Meridian Bioscience’s Earnings ESP of +3.94% and a Zacks Rank #2 raises the possibility of an earnings surprise in the to-be-reported quarter.
The company is scheduled to release results for the first quarter of fiscal 2021 on Feb 5, before market open.
Meridian Bioscience Inc. Price and EPS Surprise
Meridian Bioscience Inc. price-eps-surprise | Meridian Bioscience Inc. Quote
DENTSPLY SIRONA (XRAY - Free Report) : DENTSPLY SIRONA expects sustained improvement in sales trends with dental offices reopening and rise in patient visits in the fourth quarter. The company’s execution of additional restructuring actions too is expected to have contributed to its revenue growth and margin expansion in the fourth quarter.
The company is scheduled to release fourth-quarter 2020 results on Mar 1.
DENTSPLY SIRONA has an Earnings ESP of +4.45% and a Zacks Rank #2.
DENTSPLY SIRONA Inc. Price and EPS Surprise
DENTSPLY SIRONA Inc. price-eps-surprise | DENTSPLY SIRONA Inc. Quote
Patterson Companies, Inc. (PDCO - Free Report) : The company is expected to have gained from its new private label brand, Pivotal. Further, reopening of dental practices after widespread shutdown is expected to have driven demand for the company’s broad array of products and value-added services. This is expected to have boosted the company’s third-quarter fiscal 2021 revenues.
Pattersonis scheduled to report its fiscal third-quarter results on Feb 25. It has an Earnings ESP of +1.96% and a Zacks Rank #2.
Patterson Companies, Inc. Price and EPS Surprise
Patterson Companies, Inc. price-eps-surprise | Patterson Companies, Inc. Quote
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>