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Will These 5 Medical Device Stocks Beat This Earnings Season?
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We are currently in the middle of the first quarter of 2024 earnings season for the Medical sector (one of the 16 broad Zacks sectors within the Zacks Industry classification), with several MedTech players having already released their quarterly results. After initial encouraging quarterly results, despite companies still navigating ongoing macroeconomic headwinds, there has been a reversal in the performances. The sector’s quarterly earnings are projected to decline year over year, primarily due to worldwide geopolitical issues and healthcare labor shortages.
The latest Earnings Preview indicates that 55% of the companies in the Medical sector, constituting nearly 78% of the sector’s market capitalization, reported earnings until May 1. Of these, 75.8% beat earnings and revenue estimates. Earnings declined 31.2% year over year despite 4.4% higher revenues. 93.9% of the companies beat earnings, while 75.8% beat revenue estimates, which were already down because of the ongoing macroeconomic issues.
Overall, first-quarter earnings of the Medical sector are expected to decline 25.1% despite a 7.1% sales increase. This compares with fourth-quarter earnings decline of 17.1% despite a 7% reported revenue growth. Per the latest trends, the Medical sector is one of the five sectors that are predicted to earn less in the first quarter of 2024 compared with the year-ago period.
Medical Device Quarterly Synopsis
Integral to the broader Medical sector, the Medical Device or Zacks-defined Medical Products companies’ collective business growth is likely to have stabilized despite the ongoing macroeconomic headwinds in the United States as well as internationally. With the pandemic-related crisis gone, the industry is experiencing a rise in care visits, thereby driving demand for therapies and other healthcare services. Meanwhile, the rapid adoption of generative Artificial Intelligence (genAI) and digital therapies is helping more efficient and patient-friendly services. Rising innovation and investment in this space are being driven by an aging population, growing healthcare awareness and increasing access to better health options. Market experts believe these trends will be a major driving force behind the current earnings season.
However, the industry is facing challenges due to the worsening geopolitical environment. This situation is exacerbated by worldwide supply-chain bottlenecks that result in high costs for labor and raw materials, as well as freight and a shortage of healthcare workers. Additionally, diagnostic testing companies have been witnessing a continued year-over-year decline in testing demand for COVID-19 testing products.
Overall, the January-March months were marked by strength in product portfolios and solid customer adoption of products. Medical Device companies like Inspire Medical Systems, Inc. (INSP - Free Report) , McKesson Corporation (MCK - Free Report) , Fresenius Medical Care AG (FMS - Free Report) , Nevro Corp. (NVRO - Free Report) and Inogen, Inc. (INGN - Free Report) are likely to have been positively impacted by these tailwinds, despite encountering turbulence on the macroeconomic front.
Let’s observe the status of five MedTech players who are scheduled to announce results on May 7.
Inspire Medical: Inspire Medical’s first-quarter 2024 results might have been favored by sustained higher utilization at existing sites. The quarterly performances are also likely to have been complemented by the addition of new U.S. implanting centers and new sales territories. During fourth-quarter 2023, management commented that it has been working with commercial payers to update coverage policies for INSP’s expanded indications. This also looks promising for the stock.
The Zacks Consensus Estimate for first-quarter 2024 loss per share is pegged at 63 cents. Revenues are expected to be $161.6 million.
Inspire Medical Systems, Inc. Price and EPS Surprise
Inspire Medical does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — which increases the odds of an earnings beat. INSP has an Earnings ESP of 0.00% and a Zacks Rank #1. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
McKesson: McKesson’s fourth-quarter fiscal 2024 revenues are likely to have been driven by the rapid adoption of GLP-1 weight loss drugs. These drugs have been boosting its sales for the past few quarters. Moreover, rising demand for specialty pharmaceutical is another key factor for revenue growth. McKesson derives the majority of its revenues from the U.S. Pharmaceutical segment that distributes drugs, and other healthcare-related products in the United States. Prescription volume, a key operating metric for this segment, is likely to have reflected a stable growth like the last reported quarter. Continued robust demand for specialty pharmaceuticals, including cancer therapies, should have been a key driver for prescription volume during the fourth quarter. (Read more: McKesson to Report Q4 Earnings: What's in the Cards?)
The Zacks Consensus Estimate for fiscal fourth-quarter earnings per share (EPS) is pegged at $6.34. Revenues are expected to be $78.72 billion.
Fresenius Medical Care: Fresenius Medical Care’s first-quarter 2024 revenues are likely to have been aided by continued strength in its kidney care business. The company had earlier announced its intent to optimize its product portfolio, divest non-core business assets and exit certain markets as part of its strategic plan. As part of this plan, in January, FMS announced that it has divested three assets over the past few months, which include 127 facilities and more than 10,000 dialysis patients. In March, the company announced the sale of its dialysis clinic networks in Brazil, Colombia, Chile and Ecuador to DaVita Inc. These portfolio optimization measures are likely to have benefited the company during the to-be-reported quarter.
The Zacks Consensus Estimate for first-quarter 2024 EPS is pegged at 26 cents. Revenues are expected to be $5.15 billion.
Fresenius Medical Care AG & Co. KGaA Price and EPS Surprise
FMS has an Earnings ESP of +7.69% and a Zacks Rank #3.
Nevro: Nevro’s first-quarter 2024 results are likely to have been driven by continued strength in its Painful Diabetic Neuropathy (PDN) Indication sales. In the fourth quarter of 2023, the company acquired Vyrsa Technologies. Nevro’s management believes that Vyrsa's comprehensive product suite will likely allow physicians to personalize therapy to specific patient needs. Vyrsa's implants are also expected to provide optimal stability and enhance the opportunity for the sacroiliac joint (SI Joint) to fuse, providing relief to patients suffering from chronic SI joint pain. This is likely to have aided Nevro’s revenues in the to-be-reported quarter.
In February, NVRO announced that the FDA cleared its SI joint fusion device, which will be marketed as Nevro1, without the need to include the screw (NevroFix). This raises our optimism about the stock.
The Zacks Consensus Estimate for first-quarter 2024 loss per share is pegged at $1.02. Revenues are expected to be $98.4 million.
NVRO has an Earnings ESP of 0.00% and a Zacks Rank #3.
Inogen: Inogen’s first-quarter 2024 results are likely to have been driven by the continued uptake of the updates for its connected app and service portals rolled out by the company to provide better patient monitoring and user experiences for its customers and business-to-business partners. INGN has also initiated a shift within its rental channel through which it runs its portable oxygen concentrators via prescriber referrals. As part of a continued effort to improve its rental process and expand the rental channel, it is moving away from one of its external sales partnerships and bringing support for prescriber rentals in-house. Per management, this is an important step ensuring that Inogen is able to assist as many patients as possible in shifts and look for opportunities to streamline its cost structure. These are likely to have aided the company’s results in the to-be-reported quarter. The company’s pursuit of the regulatory clearance for PhysioAssist’s introduction to the U.S. market also looks promising for the stock.
The Zacks Consensus Estimate for first-quarter 2024 loss per share is pegged at 76 cents. Revenues are expected to be $73.3 million.
Image: Bigstock
Will These 5 Medical Device Stocks Beat This Earnings Season?
We are currently in the middle of the first quarter of 2024 earnings season for the Medical sector (one of the 16 broad Zacks sectors within the Zacks Industry classification), with several MedTech players having already released their quarterly results. After initial encouraging quarterly results, despite companies still navigating ongoing macroeconomic headwinds, there has been a reversal in the performances. The sector’s quarterly earnings are projected to decline year over year, primarily due to worldwide geopolitical issues and healthcare labor shortages.
The latest Earnings Preview indicates that 55% of the companies in the Medical sector, constituting nearly 78% of the sector’s market capitalization, reported earnings until May 1. Of these, 75.8% beat earnings and revenue estimates. Earnings declined 31.2% year over year despite 4.4% higher revenues. 93.9% of the companies beat earnings, while 75.8% beat revenue estimates, which were already down because of the ongoing macroeconomic issues.
Overall, first-quarter earnings of the Medical sector are expected to decline 25.1% despite a 7.1% sales increase. This compares with fourth-quarter earnings decline of 17.1% despite a 7% reported revenue growth. Per the latest trends, the Medical sector is one of the five sectors that are predicted to earn less in the first quarter of 2024 compared with the year-ago period.
Medical Device Quarterly Synopsis
Integral to the broader Medical sector, the Medical Device or Zacks-defined Medical Products companies’ collective business growth is likely to have stabilized despite the ongoing macroeconomic headwinds in the United States as well as internationally. With the pandemic-related crisis gone, the industry is experiencing a rise in care visits, thereby driving demand for therapies and other healthcare services. Meanwhile, the rapid adoption of generative Artificial Intelligence (genAI) and digital therapies is helping more efficient and patient-friendly services. Rising innovation and investment in this space are being driven by an aging population, growing healthcare awareness and increasing access to better health options. Market experts believe these trends will be a major driving force behind the current earnings season.
However, the industry is facing challenges due to the worsening geopolitical environment. This situation is exacerbated by worldwide supply-chain bottlenecks that result in high costs for labor and raw materials, as well as freight and a shortage of healthcare workers. Additionally, diagnostic testing companies have been witnessing a continued year-over-year decline in testing demand for COVID-19 testing products.
Overall, the January-March months were marked by strength in product portfolios and solid customer adoption of products. Medical Device companies like Inspire Medical Systems, Inc. (INSP - Free Report) , McKesson Corporation (MCK - Free Report) , Fresenius Medical Care AG (FMS - Free Report) , Nevro Corp. (NVRO - Free Report) and Inogen, Inc. (INGN - Free Report) are likely to have been positively impacted by these tailwinds, despite encountering turbulence on the macroeconomic front.
Let’s observe the status of five MedTech players who are scheduled to announce results on May 7.
Inspire Medical: Inspire Medical’s first-quarter 2024 results might have been favored by sustained higher utilization at existing sites. The quarterly performances are also likely to have been complemented by the addition of new U.S. implanting centers and new sales territories. During fourth-quarter 2023, management commented that it has been working with commercial payers to update coverage policies for INSP’s expanded indications. This also looks promising for the stock.
The Zacks Consensus Estimate for first-quarter 2024 loss per share is pegged at 63 cents. Revenues are expected to be $161.6 million.
Inspire Medical Systems, Inc. Price and EPS Surprise
Inspire Medical Systems, Inc. price-eps-surprise | Inspire Medical Systems, Inc. Quote
Inspire Medical does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — which increases the odds of an earnings beat. INSP has an Earnings ESP of 0.00% and a Zacks Rank #1. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
McKesson: McKesson’s fourth-quarter fiscal 2024 revenues are likely to have been driven by the rapid adoption of GLP-1 weight loss drugs. These drugs have been boosting its sales for the past few quarters. Moreover, rising demand for specialty pharmaceutical is another key factor for revenue growth. McKesson derives the majority of its revenues from the U.S. Pharmaceutical segment that distributes drugs, and other healthcare-related products in the United States. Prescription volume, a key operating metric for this segment, is likely to have reflected a stable growth like the last reported quarter. Continued robust demand for specialty pharmaceuticals, including cancer therapies, should have been a key driver for prescription volume during the fourth quarter. (Read more: McKesson to Report Q4 Earnings: What's in the Cards?)
The Zacks Consensus Estimate for fiscal fourth-quarter earnings per share (EPS) is pegged at $6.34. Revenues are expected to be $78.72 billion.
McKesson Corporation Price and EPS Surprise
McKesson Corporation price-eps-surprise | McKesson Corporation Quote
MCK has an Earnings ESP of -0.67% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Fresenius Medical Care: Fresenius Medical Care’s first-quarter 2024 revenues are likely to have been aided by continued strength in its kidney care business. The company had earlier announced its intent to optimize its product portfolio, divest non-core business assets and exit certain markets as part of its strategic plan. As part of this plan, in January, FMS announced that it has divested three assets over the past few months, which include 127 facilities and more than 10,000 dialysis patients. In March, the company announced the sale of its dialysis clinic networks in Brazil, Colombia, Chile and Ecuador to DaVita Inc. These portfolio optimization measures are likely to have benefited the company during the to-be-reported quarter.
The Zacks Consensus Estimate for first-quarter 2024 EPS is pegged at 26 cents. Revenues are expected to be $5.15 billion.
Fresenius Medical Care AG & Co. KGaA Price and EPS Surprise
Fresenius Medical Care AG & Co. KGaA price-eps-surprise | Fresenius Medical Care AG & Co. KGaA Quote
FMS has an Earnings ESP of +7.69% and a Zacks Rank #3.
Nevro: Nevro’s first-quarter 2024 results are likely to have been driven by continued strength in its Painful Diabetic Neuropathy (PDN) Indication sales. In the fourth quarter of 2023, the company acquired Vyrsa Technologies. Nevro’s management believes that Vyrsa's comprehensive product suite will likely allow physicians to personalize therapy to specific patient needs. Vyrsa's implants are also expected to provide optimal stability and enhance the opportunity for the sacroiliac joint (SI Joint) to fuse, providing relief to patients suffering from chronic SI joint pain. This is likely to have aided Nevro’s revenues in the to-be-reported quarter.
In February, NVRO announced that the FDA cleared its SI joint fusion device, which will be marketed as Nevro1, without the need to include the screw (NevroFix). This raises our optimism about the stock.
The Zacks Consensus Estimate for first-quarter 2024 loss per share is pegged at $1.02. Revenues are expected to be $98.4 million.
Nevro Corp. Price and EPS Surprise
Nevro Corp. price-eps-surprise | Nevro Corp. Quote
NVRO has an Earnings ESP of 0.00% and a Zacks Rank #3.
Inogen: Inogen’s first-quarter 2024 results are likely to have been driven by the continued uptake of the updates for its connected app and service portals rolled out by the company to provide better patient monitoring and user experiences for its customers and business-to-business partners. INGN has also initiated a shift within its rental channel through which it runs its portable oxygen concentrators via prescriber referrals. As part of a continued effort to improve its rental process and expand the rental channel, it is moving away from one of its external sales partnerships and bringing support for prescriber rentals in-house. Per management, this is an important step ensuring that Inogen is able to assist as many patients as possible in shifts and look for opportunities to streamline its cost structure. These are likely to have aided the company’s results in the to-be-reported quarter. The company’s pursuit of the regulatory clearance for PhysioAssist’s introduction to the U.S. market also looks promising for the stock.
The Zacks Consensus Estimate for first-quarter 2024 loss per share is pegged at 76 cents. Revenues are expected to be $73.3 million.
Inogen, Inc Price and EPS Surprise
Inogen, Inc price-eps-surprise | Inogen, Inc Quote
INGN has an Earnings ESP of 0.00% and a Zacks Rank #3.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.