Earnings Preview reflects a considerably strong quarterly performance for the Medical sector so far this reporting cycle. Going by the sector’s scorecard, 8.9% of the companies in the Medical sector, constituting nearly 29.2% of the sector’s market capitalization, reported earnings till Jan 26. Of these, 80% beat earnings estimates and 60% beat the same for revenues. Earnings increased 27% year over year on 12.2% higher revenues.
This scorecard reflects stability in the United States on continued economic reopening amid the resurgence of COVID-19 cases. However, supply chain-related disruption is still prominent, thanks to the emergence of the Omicron variant. Also, many parts of the COVID-affected international market are still suffering due to lower cash flows and challenging economic conditions.
Overall, fourth-quarter earnings for the Medical sector are expected to rise 18.4% on a 12.2% sales increase. This compares with the third-quarter reported earnings growth of 29.7% and revenue growth of 15.7%. It is worth mentioning that the Medical sector is expected to be one of the seven strongest earnings growth sectors for the fourth quarter.
Medical Products Quarterly Synopsys
The dynamic nature of the COVID-19 crisis is fast transforming the medical products industry’s landscape.
Medical Products companies’ (within the broader Medical sector) collective business showed a sequential decline in terms of the legacy base business in the third quarter. The fourth-quarter reporting cycle so far has shown a sequential rebound in terms of the legacy base business of the companies despite the emergence of the new Omicron variant. This rebound can be attributed to the fiscal and monetary stimulus and mass vaccination drive in the nation and outside. Although companies are witnessing sequential recovery in the base business, the overall trend improvement is still below the pre-COVID level.
It is noteworthy to mention here that the disruptions in the form of the emergence of new and more infectious variants of COVID-19 have again started to defer non-COVID elective hospital admissions and procedures. Meanwhile, with the COVID-19 resurgences and rise in the number of cases, testing, vaccine and therapeutic makers witnessed huge market adoption of their COVID-related healthcare support products and services in the fourth quarter.
More specifically, the fourth-quarter results of the diagnostic testing stocks have shown tremendous growth so far, led by an increase COVID-19 testing demand, which had seen a slowdown in demand in the third quarter, picked up momentum in the fourth quarter, in line with industry trends.
Let’s take a look at four Medical Products players scheduled to announce results on Feb 2.
Boston Scientific Corporation ( BSX Quick Quote BSX - Free Report) : In the fourth quarter, within Boston Scientific’s Urology/Pelvic Health arm, sales of Stone, Prostate Health and Pelvic Health franchises are expected to have recorded strong growth. The Lumenis acquisition (closed in September) is expected to have made a full-quarter contribution to the company’s sales. LithoVue, SpaceOAR and Rezum product lines are expected to have performed strongly. The company continues to expect urology/pelvic health to have one of the faster potential recovery curves, aided by a higher office ASE mix for most elective procedures. (Read more: What's in Store for Boston Scientific's Q4 Earnings?)
The Zacks Consensus Estimate for fourth-quarter earnings per share is pegged at 44 cents and revenues at $3.10 billion.
Boston Scientific Corporation Price and EPS Surprise
Boston Scientific does not have the right combination of the two key ingredients — a positive
Earnings ESP and a Zacks Rank #3 (Hold) or better. BSX has an Earnings ESP of 0.00% and carries a Zacks Rank #4 (Sell). 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. Thermo Fisher Scientific Inc. ( TMO Quick Quote TMO - Free Report) : Thermo Fisher’s Life-Science Solutions segment is likely to have registered strong top-line contributions from growing demand for COVID-19 testing with the emergence of the Omicron variant through the fourth quarter. Further, vaccine and therapy production supplies (recognized in the BioProduction and Biosciences businesses) are likely to have contributed strongly to the company’s growth in the fourth quarter. Thermo Fisher is expected to have registered robust growth in genetic sciences, biosciences and bioproduction businesses on the ramp-up of economic activity globally and the company’s pandemic response. (Read more: Rise in COVID Tests to Boost Thermo Fisher Q4 Earnings)
The Zacks Consensus Estimate for its fourth-quarter earnings per share is pegged at $5.22. Revenues are expected to be $9.03 billion.
Thermo Fisher Scientific Inc. Price and EPS Surprise
TMO has an Earnings ESP of +12.77% and a Zacks Rank #3.
Hologic, Inc. ( HOLX Quick Quote HOLX - Free Report) : Hologic’s diagnostics business is likely to have witnessed robust growth in the first quarter of fiscal 2022 owing to increased COVID-19 testing demand. In line with this, in November 2021, the company confirmed that its three SARS-CoV-2 tests detect the recently-emerged Omicron variant of coronavirus. This development is expected to have boosted Hologic’s diagnostics revenues in the fiscal first quarter. In the same month, Hologic launched the Novodiag system for on-demand molecular testing in Europe. This is expected to have witnessed strong market adoption in the fiscal first quarter by banking on the surge in coronavirus cases induced by the Omicron variant, thus adding to the top line. (Read more: Hologic to Report Q1 Earnings: What's in the Cards?)
The Zacks Consensus Estimate for its first-quarter earnings per share is pegged at $1.21. Revenues are expected to be $1.12 billion.
Hologic, Inc. Price and EPS Surprise
The company has an Earnings ESP of -1.65% and a Zacks Rank #2 (Buy).
McKesson Corporation ( MCK Quick Quote MCK - Free Report) : The company’s U.S. Pharmaceutical and Specialty Solutions segment has likey acted as a key growth driver in the third quarter of fiscal 2022. The segment is likely to have benefited from market growth and higher specialty volumes in the to-be-reported quarter. However, branded to generic conversions might have weighed on the segment’s performance. Growing demand for COVID-19 tests (owing to COVID-19 resurgence) and improvement in primary care patient visits are likely to have positively impacted the company’s Medical-Surgical solutions segment. (Read more: McKesson to Report Q3 Earnings: What's in the Cards?).
The Zacks Consensus Estimate for its third-quarter earnings per share is pegged at $5.38. Revenues are expected to be $66.13 billion.
McKesson Corporation Price and EPS Surprise
MCK has an Earnings ESP of +1.86% and a Zacks Rank #3.
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