The second-quarter earnings season commenced last week and the S&P 500 index had a good start with respect to earnings and revenue growth. Per the latest Earnings Preview, till Jul 21 2017, 97 S&P 500 members (28.1% of the total market cap) have reported their quarterly numbers. Total earnings for these members have gone up 8.4% on 5.1% higher revenues.
This week, 183 S&P 500 members are lined up to report their quarterly results. This time around, we are bullish about the equity market, which is gradually demonstrating a sequential improvement.
What’s in Store for the Medical Space?
While overall growth is steadily accelerating from the few preceding quarters’ performances, the investors are concerned about the healthcare space, a sector that has been seen to struggle a lot during the past half year, thanks to the political power change and the ongoing policy restructuring related battle.
Whether President Donald Trump finally amends its earlier proposed American Health Care Act (AHCA) or totally repeals and replaces Obamacare, uncertainty within the medical space is towering high. Investors are currently adopting a wait-and-see policy about the space.
This lack of visibility befuddles the bullish trend the Medical sector (one of the 16 broader Zacks sectors) was maintaining over the past few quarters. Accordingly, for the second quarter, expected earnings growth rate stands at 0.00%, a break-even level on 3.8% revenue growth projection. This compares unfavorably with the first-quarter 2017’s reported earnings growth rate of 5.6% on 5.7% revenue growth.
Let’s take a sneak peek at the performance of four major Medical - Instruments companies within the broader Medical space expected on Jul 26.
Edwards Lifesciences Corporation (EW - Free Report) : This leading cardiovascular product maker is scheduled to report its second-quarter 2017 results after the market closes on Jul 26. Edwards Lifesciences posted strong global sales in the last reported quarter, primarily buoyed by strength in Transcatheter Heart Valve (TAVR). Banking on continued therapy adoption across all geographies with notable strength in the U.S., the company is expected to maintain this bullish trend in the second quarter of 2017 as well.
Edwards Lifesciences currently carries a Zacks Rank #2 (Buy) and has an Earnings ESP of 0.00%. That is because both the Most Accurate estimate and the Zacks Consensus Estimate are on par at 88 cents. We note that, while a positive Zacks ESP serves as a leading indicator of a likely positive earnings surprise, a bullish Zacks Rank increases the predictive power of the ESP.
(Read More: Edwards Lifesciences Q2 Earnings: A Surprise in Store?)
Thermo Fisher Scientific, Inc. (TMO - Free Report) : This MA-based medical instruments manufacturer’s focus to boost growth through implementation of strategies and strengthening of its product offerings is encouraging. These initiatives are likely to help it post solid results in the second quarter. The company has already spent $750 million on research and development in 2016 and the same trend is expected through this year too.
Thermo Fisher is expected to beat expectations when it reports its second-quarter 2017 results before the market opens, as it has the right combination of two key ingredients. The stock currently carries a Zacks Rank #2 (Buy) and has an Earnings ESP of +0.44%.That is because the Most Accurate estimate is at $2.27, while the Zacks Consensus Estimate is lower at $2.26. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
(Read More: Will Thermo Fisher's Q2 Earnings Surpass Expectations?)
Varian Medical Systems, Inc. (VAR - Free Report) : This leading provider of radiotherapy, radiosurgery, proton therapy and brachytherapy for treating cancer is scheduled to report its third-quarter fiscal 2017 earnings after the market closes.
To strengthen its foothold in the oncology business, the company launched its FDA-approved product Halcyon in May. Also in June, the company signed an agreement with Vijametech and UPMC to establish radiation oncology centers in Vietnam. We are also upbeat about Varian’s prospects internationally, where it primarily banks on proton therapy as an advanced treatment option for cancer patients.
Our proven model does not conclusively show that Varian Medical is likely to beat on earnings this quarter. Varian currently carries a Zacks Rank #3 (Hold) and has an Earnings ESP of 0.00%. That is because both the Most Accurate estimate and the Zacks Consensus Estimate are on par at 94 cents. You can see the complete list of today’s Zacks #1 Rank stocks here.
(Read More: Varian Medical Q3 Earnings: Is a Surprise in Store?)
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