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Why Investors Need to Take Advantage of These 2 Medical Stocks Now

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Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.

Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive earnings surprises.

Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.

The Zacks Earnings ESP, Explained

The Zacks Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate.

Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.

In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 28.3% annual returns on average, according to our 10 year backtest.

Most stocks, about 60%, fall into the #3 (Hold) category, and they are expected to perform in-line with the broader market. Stocks with a #2 (Buy) and #1 (Strong Buy) rating, or the top 15% and top 5% of stocks, respectively, should outperform the market, with Strong Buy stocks outperforming more than any other rank.

Should You Consider Sanofi?

The final step today is to look at a stock that meets our ESP qualifications. Sanofi (SNY - Free Report) earns a #2 (Buy) nine days from its next quarterly earnings release on February 3, 2023, and its Most Accurate Estimate comes in at $0.92 a share.

SNY has an Earnings ESP figure of +2.22%, which, as explained above, is calculated by taking the percentage difference between the $0.92 Most Accurate Estimate and the Zacks Consensus Estimate of $0.90. Sanofi is one of a large database of stocks with positive ESPs. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

SNY is one of just a large database of Medical stocks with positive ESPs. Another solid-looking stock is Lantheus Holdings (LNTH - Free Report) .

Lantheus Holdings, which is readying to report earnings on February 23, 2023, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $0.98 a share, and LNTH is 29 days out from its next earnings report.

For Lantheus Holdings, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.96 is +1.82%.

Because both stocks hold a positive Earnings ESP, SNY and LNTH could potentially post earnings beats in their next reports.

Find Stocks to Buy or Sell Before They're Reported

Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>

See More Zacks Research for These Tickers

Normally $25 each - click below to receive one report FREE:

Sanofi (SNY) - free report >>

Lantheus Holdings, Inc. (LNTH) - free report >>

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