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3 Healthcare Stocks Poised to Surpass Earnings Estimates in Q1

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Healthcare stocks, which are part of the Zacks Medical sector (one of the 16 broad Zacks sectors within the Zacks Industry classification), are likely to have benefited from factors such as rebounding patient volumes, continuous mergers and acquisitions (M&A), and a solid telehealth services suite in the first quarter of 2022. Stocks in the medical sector frequently resort to substantial technology advancements, which might have provided a boost to their to-be-reported quarterly results.

The latest Earnings Preview indicates that the total earnings of the medical sector in first-quarter 2022 is projected to improve 16.3% year over year, while revenues of these companies are expected to increase 14.8%. The Earnings Preview states that the earnings of 77.2% of companies in the Medical sector that have already reported their quarterly results have grown 18.9% year over year on 17.3% higher revenues in the first quarter.

Factors Likely to Shape the Healthcare Stocks in Q1

Revenues of healthcare stocks are likely to have gained from improvement in patient admissions and outpatient visits in the first quarter. Large-scale vaccination programs undertaken worldwide have made people who were previously apprehensive of contracting the infection more optimistic about hospital visits. A rise in admissions bodes well as they contribute significantly to a hospital’s top-line growth.

Since most of the healthcare systems intensified their focus on treating the massive number of COVID patients, elective-surgery procedures were temporarily put on hold. Consequently, there remains a significant pent-up demand for those postponed non-emergency procedures. Though the pandemic still persists, its severity has somewhat faded, which in turn has been encouraging the healthcare systems to divert their resources to pursue the postponed non-emergency procedures. The increased undertaking of these procedures might have bolstered the revenue growth of healthcare providers in the quarter under review.

Healthcare stocks have been committed to a M&A strategy in a bid to expand their healthcare portfolio. Continuous expansion of one’s portfolio might have expanded business scale and generated higher revenues for the medical stocks in the quarter under review. However, the benefit of such initiatives (M&A) might have been partly offset by escalating expenses required to undertake these growth-related efforts.

The pandemic restricted individuals within their homes, which led to most healthcare stocks pursuing investments in developing telehealth solutions for catering to patients while eliminating the need for a hospital visit. Healthcare providers have been benefiting from the growing adoption of telehealth services as they were grappling with revenue losses due to deferred elective or suspended non-COVID-19 procedures. With the trend continuing, these services are likely to have generated a steady revenue stream for medical stocks in the first quarter as well. Apart from the advantage that these services provide, continuous investments undertaken by healthcare stocks in upgrading solutions suite and employing advanced technologies might have dampened earnings to some extent in the quarter under review.

Potential Q1 Outperformers

Amid this backdrop, we have identified three healthcare stocks, namely, Elanco Animal Health Incorporated (ELAN - Free Report) , DocGo Inc. (DCGO - Free Report) and Singular Genomics Systems, Inc. (OMIC - Free Report) , all of which are poised to outshine the Zacks Consensus Estimate this earnings season. These stocks have the ideal combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), 3 (Hold) — to surpass expectations. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

You can see the complete list of today's Zacks #1 Rank stocks here.

Headquartered in Greenfield, IN, Elanco operates as a global independent animal health leader and is focused on rolling out cutting-edge products and services required to cure diseases in pets and farm animals. New product approvals and launches, continued productivity improvement, and reduced operating expenses might have favored ELAN’s first-quarter 2022 results.

The Zacks Consensus Estimate for Elanco’s to-be-reported quarter’s earnings is pegged at 35 cents, which remains well within management guidance of 33-38 cents per share. The consensus mark for revenues stands at $1.22 billion and is well within management’s range of $1.20 billion to $1.23 billion. ELAN surpassed earnings estimates in each of the trailing four quarters.

Elanco has an Earnings ESP of +2.44%. This is because the Most Accurate Estimate of 36 cents is pegged higher than the Zacks Consensus Estimate of 35 cents. Also, ELAN carries a Zacks Rank #3. It is scheduled to release first-quarter earnings on May 9.

DocGo, based in New York, is best known for offering last-mile mobile care services and integrated medical transportation solutions. New and expanded contracts are likely to have led to higher Mobile Health revenues in the first quarter. Improved Medical transport revenues may have contributed to DCGO’s top-line growth in the to-be-reported quarter.

DocGo has an Earnings ESP of +87.50% and a Zacks Rank #2. It is set to release first-quarter earnings on May 9.

The Zacks Consensus Estimate for DocGo’s first-quarter earnings and revenues is pegged at 5 cents and $108.1 million, respectively. The consensus mark for first-quarter earnings has been revised 66.7% north in the past 30 days. In the fourth quarter of 2021, DCGO posted impressive earnings of 17 cents, which outpaced the consensus mark by a whopping 750.00%. Total revenues of $121 million beat the Zacks Consensus Estimate by 17.8%.

DocGo Inc. Price and EPS Surprise

DocGo Inc. Price and EPS Surprise

DocGo Inc. price-eps-surprise | DocGo Inc. Quote

Headquartered in California, Singular Genomics is a leading life science technology company. A robust product pipeline combined with the cost savings achieved from the commercial launch of G4 is likely to have aided the first-quarter results of OMIC.

Singular Genomics has an Earnings ESP of +2.94%. This is because the Most Accurate Estimate of a loss of 33 cents is pegged higher than the Zacks Consensus Estimate of a loss of 34 cents. Also, it carries a Zacks Rank #3. OMIC is scheduled to release first-quarter earnings on May 10.

The Zacks Consensus Estimate for OMIC’s to-be-reported quarter’s bottom line is pegged at a loss of 34 cents. In the fourth quarter of 2021, Singular Genomics’ net loss per share was 27 cents, which was significantly narrower than the prior-year quarter’s loss of 73 cents.


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Elanco Animal Health Incorporated (ELAN) - free report >>

Singular Genomics Systems, Inc. (OMIC) - free report >>

DocGo Inc. (DCGO) - free report >>