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Medical Products Stock Q3 Earnings on Oct 27: TMO, EW & More

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The latest Earnings Preview indicates an overall stable quarterly performance but a sequential decline for the Medical sector so far this reporting cycle. Going by the sector’s scorecard, 10.9% of the companies in the Medical sector, constituting nearly 29.2% of the sector’s market capitalization, reported earnings till Oct 20. Of these, 100% beat earnings estimates and 83.3% beat on revenues. Earnings increased 20.2% year over year on 12.4% higher revenues.

This scorecard reflects a comparatively stable market condition within the United States on the gradual reopening of the economy even amid the rise of the Delta variant. However, many parts of the COVID-affected international market are still suffering due to lower cash flows and difficult economic conditions.

Overall, third-quarter earnings for the Medical sector are expected to rise 17.5% on 12% sales increase. This compares with Q2’s reported earnings growth of 32.1% and revenue growth of 21.3%.

Medical Products Q3 Sneak Peek

The dynamic nature of the COVID-19 crisis is fast transforming the medical products industry landscape. The Medical Products companies’ (within the broader Medical sector) collective business growth improved significantly in Q2, driven by gradual lifting of restrictions. However, through the months of the third quarter, these companies experienced industry-wide softness in terms of their legacy base business (excluding COVID-19 focused wing). This was due to the rapidly growing case count through July and August with the emergence of the more-lethal Delta variant of coronavirus.

On the other hand, with the increase in the number of cases, testing, vaccine and therapeutic makers witnessed huge market adoption of their COVID-related healthcare support products and services in Q3.

More specifically, the third-quarter results of the medical product stocks so far have shown temporary retraction of the base business compared to the second quarter. At the same time, diagnostic testing stocks which had registered slowdown in demand for COVID-19 testing in Q2 picked up momentum again, in line with industry trends.

The Zacks Medical Product sector currently carries a Zacks Sector Rank in the bottom 37% (158 of 254 industries).

Let’s take a look at four MedTech players scheduled to announce results on Oct 27.

Thermo Fisher Scientific Inc. (TMO - Free Report) : In the third quarter, we expect Thermo Fisher’s Analytical Instruments segment to have registered strong growth in Chromatography and Mass Spectrometry, and the Materials and Structural Analysis businesses. The company’s recent launches, like the new Thermo Scientific Orbitrap IQ-X Tribrid Mass Spectrometer (which further extends the impact of the industry-leading Orbitrap platform to accelerate small molecule analysis from metabolites and other complex compounds), are likely to have contributed to its Q3 top line. (Read more: Thermo Fisher to Report Q3 Earnings: What's in Store?)

The Zacks Consensus Estimate for third-quarter earnings per share is pegged at $4.67. Revenues are expected to be $8.33 billion.

Thermo Fisher has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — which increases the odds of an earnings beat.

The company has an Earnings ESP of +3.02% and a Zacks Rank #2 (Buy).

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Edwards Lifesciences Corporation (EW - Free Report) : Like the last-reported quarter, Edwards Lifesciences is likely to have witnessed a rebound in its business, banking on reopening of the economy and an increase in non-COVID hospital visits. During the second quarter, Edwards Lifesciences registered strong growth in HemoSphere orders as hospital spending in the United States continued to rise. We believe this to have continued in the fiscal third quarter of 2021 due to market recovery, thus adding to the top line. (Read more: Edwards Lifesciences to Post Q3 Earnings: What's in Store?)

The Zacks Consensus Estimate for the third quarter of 2021 is pegged at a loss per share of 53 cents. Revenues are expected to be $1.33 billion.

The company has an Earnings ESP of -1.10% and a Zacks Rank #4.

Boston Scientific Corporation (BSX - Free Report) : Top-line growth in the third quarter is likely to have improved sequentially with the gradual opening up of the economy and the resumption of elective procedures in the United States and in many regions across the globe. Boston Scientific, during its July update, stated that an improving scenario along with an innovative pipeline, expansion into faster growth markets, globalization efforts and enhanced digital capabilities poise it well for strong second-half results. The company has already seen strong procedure recovery and market share gains across many of the businesses and regions. This is likely to have continued through the Q3 months. (Read more: Boston Scientific Product Launches to Drive Q3 Earnings)

The Zacks Consensus Estimate for the third quarter is pegged at an earnings per share of 40 cents. Revenues are expected to be $2.99 billion.

The company has an Earnings ESP of -0.67% and a Zacks Rank #3.

Align Technology, Inc. (ALGN - Free Report) : For the past few quarters, Align Technology has been registering impressive sales of Invisalign clear aligners and iTero imaging systems. This momentum is likely to have continued during the fiscal third quarter, courtesy of the resumption of practices globally. In the teen segment, the company has been experiencing improvement in Invisalign utilization and case submissions from Invisalign doctors with strong growth from North America and EMEA orthodontists due to gradual business recovery. These are likely to have contributed significantly to third-quarter revenues. (Read more: Align Technology to Post Q3 Earnings: What's in Store?)

The Zacks Consensus Estimate for third-quarter earnings per share is pegged at $2.54. Revenues are expected to be $962.3 million.

The company has an Earnings ESP of 0.00% and a Zacks Rank #3.

Align Technology, Inc. Price and EPS Surprise

Align Technology, Inc. Price and EPS Surprise

Align Technology, Inc. price-eps-surprise | Align Technology, Inc. Quote