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MedTech Stocks to Watch for Earnings on Aug 3

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The latest Earnings Preview reflects an impressive second-quarter performance for the Medical sector this reporting cycle. Per the scorecard, 25% of the companies in the Medical sector, comprising 41.2% of the sector’s market capitalization, have reported earnings till Jul 27. Of these, 85.7% beat earnings estimates and 78.6% beat the same for revenues. Earnings increased 5.1% year over year on 10.7% higher revenues.

This scorecard reflects the Medical sector’s continued resilience amid an uncertain macroeconomic environment. Several players within this space have struggled throughout the second quarter due to mounting raw material costs, labor-supply constraints and other supply-chain disruptions exacerbated by the ongoing conflict in Ukraine. Despite the difficult circumstances, the consistent opening of economies, with countries lifting COVID-19 restrictions, might have favored growth process in the second quarter.

Overall, second-quarter earnings of the Medical sector are expected to rise a mere 1.1% on a 7.9% sales increase. This compares with the first-quarter reported earnings growth of 16.7% and revenue growth of 15.6%.

MedTech Quarterly Synopsys

Integral to the broader Medical sector, MedTech or Zacks-defined Medical Products companies’ collective business growth so far has recorded an improvement compared with the last year, with a significant reduction in COVID-led fatality across the United States and other developed countries despite rising infections. With the consistent opening up of economies and the companies successfully addressing backlogs related to pent-up demand, we anticipate higher year-over-year growth within the core businesses of these stocks in Q2.

The second-quarter results of the diagnostic testing companies that have already come out with their earnings mostly have shown a sequential rise in testing demand due to the increase in new COVID-19 cases. On a year-over-year basis, the COVID-19-led diagnostic testing revenues are down in Q2. The consolidated scorecard at the end of the earnings season is expected to reflect this industry-wide trend prominently.

Further, the global shortage of semiconductors chips used in producing life-saving medical equipments and other persistent disruptions in the supply chain continue to pose challenges for the MedTech companies. These ongoing challenges are expected to have significantly dragged down results across several businesses in the industry during the second quarter.

Overall, as we anticipated earlier, the result so far depicted a rebound in the core businesses through the months of the second quarter. MedTech companies like Charles River Laboratories International, Inc. (CRL - Free Report) , CVS Health Corporation (CVS - Free Report) , Bruker Corporation (BRKR - Free Report) and NuVasive, Inc. (NUVA - Free Report) are likely to have been positively influenced by these factors too in Q2.

Let’s take a look at these four MedTech players scheduled to announce results on Aug 3.

Charles River: The Research Models and Services (RMS) segment is likely to have gained from continued global demand for research models and associated services. The company’s ongoing initiatives to boost operating performances by HemaCare and Cellero are anticipated to have had a beneficial impact on the cell supply business. (Read more: Charles River to Report Q2 Earnings: What's in Store?)

The Zacks Consensus Estimate for the company’s second-quarter 2022 revenues is pegged at $998.45 million, suggesting a 9.2% rise over the year-ago reported figure. The Zacks Consensus Estimate for Charles River’s second-quarter 2022 earnings per share of $2.74 indicates a 4.9% uptick from the year-ago reported figure.

Per our proven model, a stock with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates. However, this is not the case here, as you can see below.

CRL has an Earnings ESP of -0.37% 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 stocks here.

CVS Health: The retail/long-term care (LTC) segment is likely to have benefited from the enhanced pharmacy and front-store sales growth, similar to the last reported quarter’s levels. We expect this sales performance to have been led by continued demand for COVID-19 over-the-counter (OTC) test kits and vaccines. With economies reopening and COVID-19 cases on the rise, the segment is likely to have witnessed continued sales of COVID-19 OTC test kits in the to-be-reported quarter. (Read more: CVS Health to Report Q2 Earnings: What's in the Cards?)

For second-quarter 2022, the Zacks Consensus Estimate for total revenues of $76.57 billion implies an improvement of 5.5% from the prior-year quarter’s reported figure. The consensus estimate for CVS Health’s earnings per share is pegged at $2.16, indicating a decline of 10.7% from the prior-year quarter’s reported figure.

CVS has an Earnings ESP of -0.14% and a Zacks Rank #3.

CVS Health Corporation Price and EPS Surprise

 

CVS Health Corporation Price and EPS Surprise

CVS Health Corporation price-eps-surprise | CVS Health Corporation Quote

 

Bruker: Bruker is likely to have benefitted from the increased demand for its differentiated high-value scientific instruments and life science solutions in the second quarter. Similar to the first quarter, the company is likely to have witnessed robust growth in organic bookings within the Bruker Scientific Instruments (BSI) segment. Besides, robust contributions from gigahertz-class NMR instruments are likely to have added to the Q2 top-line results.

The Zacks Consensus Estimate for Bruker’s second-quarter revenues is pegged at $590.94 million, which implies a rise of 3.5% from the year-ago figure. The consensus estimate for earnings per share is pegged at 45 cents, suggesting an increase of 2.3% from the prior-year reported figure.

BRKR has an Earnings ESP of +0.64% and a Zacks Rank #4.

Bruker Corporation Price and EPS Surprise

 

Bruker Corporation Price and EPS Surprise

Bruker Corporation price-eps-surprise | Bruker Corporation Quote

 

NuVasive: NuVasive’s Q2 results are likely to have gained from a continued rebound in procedural volumes across the U.S. and international businesses as economies reopen worldwide. The top-line is expected to have benefitted from the increased uptake of NuVasive’s unique product introductions, including the Pulse platform, the C360 system and the Simplify Cervical Disc. The company is also likely to have witnessed consistent growth across the Asia Pacific, Europe, and Latin America regions, benefitting the Q2 top-line.

For second-quarter 2022, the Zacks Consensus Estimate for total revenues of $305.83 million implies an improvement of 3.7% from the prior-year quarter’s reported figure. The consensus estimate for earnings per share is pegged at 55 cents, indicating an 8.3% decline from the prior-year quarter’s reported figure.

NuVasive has an Earnings ESP of -5.21% and a Zacks Rank #3.

NuVasive, Inc. Price and EPS Surprise

 

NuVasive, Inc. Price and EPS Surprise

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

 

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