With results from 423 S&P 500 members already out, the third-quarter earnings season is coming to a close. According to our latest Earnings Preview report, the scorecard so far has portrayed a much better picture with the third quarter successfully emerging as the first to witness earnings growth after five back-to-back quarters of declines for the S&P 500 index. With a handful of earnings announcements on the way, this season has so far confirmed an improving trend.
Encouragingly, results from 93.2% of the Medical sector’s market cap on the S&P 500 index are already out, with 63% beating EPS estimates, while 54.3% surpassed revenue expectations. The earnings growth rate was 6.4% year over year on account of a 7.4% rise in revenues.
What’s in Store for the Med-Product Space?
Medical Product, a specialized sub-sector within the broader Medical sector, is showing a lot of potential as well. This is impressive given the severe economic instability, fierce competition, and increasing cost related hazards leading to regulatory complexities. The success of the Medical Product industry comes on the back of successful execution of some top strategic priorities, which include R&D and product development, strategic M&A and alliances along with a focus on emerging market expansion.
Let’s take a look at the Medical Product stocks slated to release their quarterly reports on Nov 10:
Perrigo Company plc (PRGO - Free Report)
Dublin, Ireland-based Perrigo Company, with a diversified revenue stream, has a presence in the over-the-counter (OTC) market, and sells infant formulas for the store brand market, generic extended topical prescription (Rx) products and specialty pharmaceutical drugs. We are positive on the company’s growth-by-acquisition strategy. Also, restructuring initiatives bode well for the company's growth. On the flip side, we are concerned about its disappointing earnings guidance for 2016. (Read More: Perrigo Q3 Earnings: What's in Store for the Stock?)
Our proven model does not conclusively show that Perrigo is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Along with a Zacks Rank #2, Perrigo has an Earnings ESP of -3.77%. That is because the Most Accurate estimate is pegged lower at $1.53 compared to the Zacks Consensus Estimate of $3.77. We note that while a favorable Zacks Rank increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Glaukos Corporation (GKOS - Free Report)
This ophthalmic medical technology company develops and commercializes products and procedures designed for the treatment of glaucoma. The company is expected to beat expectations when it reports third-quarter 2016 earnings on Nov 10. This is because it has an Earning ESP of +100% along with a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Meridian Bioscience, Inc. (VIVO - Free Report)
Meridian Bioscience is a life science company that develops, manufactures, and distributes diagnostic test kits primarily for various gastrointestinal, viral, respiratory, and parasitic infectious diseases worldwide.
Meridian Bioscience currently holds a Zacks Rank #5 and an Earnings ESP of 0.00%. That is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 21 cents. The company is scheduled to report third-quarter 2016 numbers on Nov 10.
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