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Dental Stocks' Earnings to Watch on Oct 27: MCK, WST, CNMD

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The Q3 earnings season is gradually picking up stream and as per our latest Earnings Trends report, as of Oct 21, 116 S&P 500 members (23.2% of the total index) have reported their quarterly numbers. So far, the earnings reports demonstrated quite an optimistic trend and if this continues till the end, this quarter will finally be successful in showing positive earnings growth for the first time after five back-to-back quarters of earnings declines for the S&P 500 index.

Total earnings are up 3.3% year over year for these 116 S&P 500 members on a beat ratio of 80.2%. Revenues have increased 1.8%, with 62.9% of the companies beating expectations.

With the majority of reports yet to be released, the ongoing week with huge earnings announcements lined up, will be crucial for deciding whether this Q3 will genuinely prove itself to be a trend-changing quarter. Irrespective of the outcome, there is some definite good news for investors keen on the Medical sector.

Per the report, Medical is one of the nine broader sectors among the 16 Zacks sectors which are expected to report earnings growth in Q3. The sector is expected to deliver 3.7% earnings growth on the back of 7.4% higher revenues in the quarter.

What’s in Store for the Dental Space?

Dental, an important part of the medical device subcategory within the broader Medical sector, holds a lot of promise at the moment. A high level of traction of 3D printing has been observed lately due to advancements in technology in the overall medical sector, particularly in the dental industry. One of the most significant attributes that 3D printing brings to the dental industry is the capacity to provide customized dental products in a way that was not possible earlier. Moreover, consistent innovation as well as rapid improvement in the flagship CAD/CAM (computer-aided design and computer-aided manufacturing) system has been this industry’s strong suit. Without a doubt, the dental industry – a growing sub-sector under the broader Medical sector − with the aforementioned trends, holds a lot of potential at present.

Let’s take a look at the major Dental stocks slated to release their quarterly reports on Oct 27:

McKesson Corporation (MCK - Free Report)

San Francisco, CA-based McKesson Corporation is a health care services and information technology company. The company delivers pharmaceuticals, medical supplies and health care information technologies to the health care industry. We are worried about the fact that McKesson depends heavily on the pharmaceutical distribution business, which is characterized by slow growth. In addition, management expects weaker generic pharmaceutical pricing trends. Moreover, the expiration of McKesson’s contract with Optum will be a major headwind.

McKesson is scheduled to report its second-quarter fiscal 2017 numbers on Oct 27. The company currently has a Zacks Rank #3 (Hold) and an Earnings ESP of -1.61%. That is because the Most Accurate estimate stands higher at $3.05 while the Zacks Consensus Estimate is pegged at $3.04. We note that while a favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise, a bullish Zacks rank #1 (Strong Buy), 2 (Buy) or 3 increases the predictive power of the ESP.

We also caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

MCKESSON CORP Price and EPS Surprise

MCKESSON CORP Price and EPS Surprise | MCKESSON CORP Quote

West Pharmaceutical Services, Inc. (WST - Free Report)

Headquartered in Exton, PA, this is a leading manufacturer of packaging components and delivery systems for injectable drugs and healthcare products. The company currently has businesses across North and South America, Europe, Asia and Australia.

West Pharmaceutical is scheduled to report its third-quarter 2016 numbers on Oct 27. However, our proven model does not conclusively show that West Pharmaceutical is likely to beat earnings this quarter. This is because West Pharmaceutical currently has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%. That is because both the Most Accurate estimate and the Zacks Consensus Estimate are at 52 cents.

WEST PHARM SVC Price and EPS Surprise

WEST PHARM SVC Price and EPS Surprise | WEST PHARM SVC Quote

CONMED Corporation (CNMD - Free Report)

Headquartered in Utica, NY, CONMED is a major medical products manufacturer specializing in surgical instruments and devices for minimally invasive procedures and monitoring. A large recurring revenue base, new product launches and reorganization of certain aspects of the commercial sales organization should drive the top line in the long run. On the other hand, foreign exchange headwinds are expected to significantly impact CONMED’s top-line growth in the near term. Intensifying competition and pricing pressure by GPOs are added concerns.

This medical device company is scheduled to report its third-quarter 2016 earnings on Oct 27. It has an Earnings ESP of 0.00% with a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

While a Zacks Rank #3 increases the predictive power of ESP, a 0.00% ESP makes surprise prediction difficult. We note that the company registered an earnings beat of 4.44% in the last reported second quarter. However, its trailing 12-month average surprise came in at  a negative 8.06%.

CONMED CORP Price and EPS Surprise

CONMED CORP Price and EPS Surprise | CONMED CORP Quote

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