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Medical Product Earnings Lineup for Jul 26: BAX, EW & More
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The second quarter has seen releases from 87 members in the S&P 500 cohort as of Jul 20. Per our latest Earnings Preview, performances of these index participants indicate 20.9% increase in total earnings on 10.3% higher revenues. The beat ratio is also impressive with 86.2% companies surpassing bottom-line expectations and 77% outperforming on the top-line front.
By the end of the season, second-quarter earnings for the S&P 500 companies as a whole are expected to be up 21% from the year-ago quarter on 8.3% growth in revenues.
Earnings Expectations from Medical Sector
Medical — one of the broader sectors among the 16 Zacks sectors — is expected to record earnings growth this season. For the quarter under review, the projected earnings growth rate for the sector is 9.1% on 6.4% revenue growth.
With majority of bigwigs yet to report results, the upcoming week will be crucial in deciding whether this quarter will turn out to be a real game changer for the sector.
What’s Favoring the Medical Products Space?
Buoyed by a streak of regulatory developments and deep R&D focus, the niche Medical Product industry shines bright on the bourses. The industry rose almost 7.4% in three months’ time, higher than the S&P 500’s increase of just 5.7%. Here we take a look at two mega trends that are likely to drive the Medical Products companies in the quarter to be reported as well.
Taxes Repealed
A bipartisan two-year suspension of ‘Medical Device’ tax in the beginning of the year, which imposed a 2.3% excise tax on Medical Product and Medical Device manufacturers, has been a temporary relief. It will be put into effect on Jan 1, 2020.
The ratification of the tax-repeal amendment has encouraged massive investments in the sector, which is also likely to drive the quarterly results.
Technological Advancements
Growth in the Medical Products space also pertains to market dynamics and shift in consumer demand, courtesy of the latest trend of robotic surgeries, Medical Mechatronics, Big-data analytics, bio printing, 3D printing, electronic health records (EHR), predictive analytics, real-time alerting and revenue cycle management services.
Evidently, companies that adopted AI technologies have witnessed a 50% reduction in healthcare costs and have also experienced improved patient outcome of more than 50%.
This along with a rise in minimally-invasive surgeries, use of IT for quick and improved patient care and the shift of the payment system to a value-based model is likely to drive profits of Medical Product companies this earnings season.
Probable Deterrents for the Medical Products Space
At the onset of the second-quarter earnings season, a series of geo-political tensions rattled the U.S. economy, the Medical Products space being no exception. Although it would be too early for these issues to dent second-quarter results, analysts believe that these might have some adverse effect on the earnings results of the Medical Product companies.
While ties between the United States and North Korea have strengthened in one, the ongoing trade war with China is a concern. This can be a serious threat to the U.S. Medical Products industry that sells about $4.7 billion worth of goods annually to China and imports a total of $5 billion of the same (an article by Christian B. Jones in Mondaq). Currently, President Trump has implemented $34 billion of import duties on Chinese goods and China imposed tariffs on U.S. exports of $3 billion.
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or #3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
So, considering the above factors, we take a look at three Medical Products companies that are set to report on Jul 26, before market opens.
Abiomed Inc’s first-quarter fiscal 2019 results will gain from its flagship Impella product line. An impressive guidance for fiscal 2019 and the company’s recent foray into the coveted S&P 500 benchmark are the tailwinds (read more: Will Flagship Impella Drive Abiomed's Q1 Earnings?).
For the quarter to be reported, the Zacks Consensus Estimate for revenues is pegged at $171.9 million, reflecting year-over-year rise of 29.8%. The Zacks Consensus Estimate for adjusted earnings per share is pegged at 80 cents, indicating a surge of 77.8% year over year. On average, the company delivered a positive earnings surprise of 22.8% over the last four quarters.
However, our quantitative Zacks model does not conclusively predict earnings beat for the company, given the combination of a Zacks Rank of 2 and an Earnings ESP of -10.78%.
Baxter International Inc (BAX - Free Report) ) is expected to witness steady growth in second-quarter 2018 results, courtesy of international ventures. While this can significantly drive results, a raised guidance and strategic collaborations are other tailwinds (read more: Can International Sales Drive Baxter's Q2 Earnings?).
For the quarter under review, the Zacks Consensus Estimate for revenues is pegged at $2.84 billion, reflecting a year-over-year rise of 8.9%. The Zacks Consensus Estimate for adjusted earnings per share is pegged at 71 cents, indicating an increase of 12.7% year over year. On average, Baxter delivered a positive earnings surprise of 10.1% over the last four quarters.
The quantitative Zacks model predicts estimates beat for the company, given the combination of a Zacks Rank of 3 and an Earnings ESP of +0.90%.
Edwards Lifesciences Corporation ((EW - Free Report) ) is expected to gain from strength in Transcatheter Heart Valve Therapy segment (THVT) in second-quarter 2018 results. Banking on constant therapy adoption across all geographies with notable strength in the United States, the company is expected to maintain this bullish trend (read more: Will Edwards' Steady Overall Growth Drive Q2 Earnings?).
For the quarter to be reported, the Zacks Consensus Estimate for revenues is pegged at $964.7 million, reflecting a year-over-year rise of 14.9%. The Zacks Consensus Estimate for adjusted earnings per share is pegged at $1.13, indicating an increase of 4.6%. On average, Edwards Lifesciences delivered a positive earnings surprise of 8.9% over the last four quarters.
The quantitative Zacks model predicts an earnings beat for the company, given the combination of a Zacks Rank of 3 and an Earnings ESP of +0.59%.
Edwards Lifesciences Corporation Price and EPS Surprise
McKesson Corporation (MCK - Free Report) ) is expected to gain from strength in the core Distribution Solutions segment in first-quarter fiscal 2019 results. Distribution Solutions is one of McKesson’s key segments, which is engaged in the distribution of branded and generic pharmaceutical drugs along with other healthcare-related products (read more: Will Core Distribution Unit Aid McKesson Q1 Earnings?).
The Zacks Consensus Estimate for first-quarter revenues is pegged at $53 billion, reflecting year-over-year growth of 3.9%. The same for earnings is pegged at $2.78, mirroring year-over-year improvement of 13%. Notably, McKesson has delivered a positive average earnings surprise of 5.2% in the trailing four quarters.
However, the quantitative Zacks model does not conclusively predict earnings beat for the company, considering the combination of a Zacks Rank of 3 and an Earnings ESP of 0.00%.
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Medical Product Earnings Lineup for Jul 26: BAX, EW & More
The second quarter has seen releases from 87 members in the S&P 500 cohort as of Jul 20. Per our latest Earnings Preview, performances of these index participants indicate 20.9% increase in total earnings on 10.3% higher revenues. The beat ratio is also impressive with 86.2% companies surpassing bottom-line expectations and 77% outperforming on the top-line front.
By the end of the season, second-quarter earnings for the S&P 500 companies as a whole are expected to be up 21% from the year-ago quarter on 8.3% growth in revenues.
Earnings Expectations from Medical Sector
Medical — one of the broader sectors among the 16 Zacks sectors — is expected to record earnings growth this season. For the quarter under review, the projected earnings growth rate for the sector is 9.1% on 6.4% revenue growth.
With majority of bigwigs yet to report results, the upcoming week will be crucial in deciding whether this quarter will turn out to be a real game changer for the sector.
What’s Favoring the Medical Products Space?
Buoyed by a streak of regulatory developments and deep R&D focus, the niche Medical Product industry shines bright on the bourses. The industry rose almost 7.4% in three months’ time, higher than the S&P 500’s increase of just 5.7%. Here we take a look at two mega trends that are likely to drive the Medical Products companies in the quarter to be reported as well.
Taxes Repealed
A bipartisan two-year suspension of ‘Medical Device’ tax in the beginning of the year, which imposed a 2.3% excise tax on Medical Product and Medical Device manufacturers, has been a temporary relief. It will be put into effect on Jan 1, 2020.
The ratification of the tax-repeal amendment has encouraged massive investments in the sector, which is also likely to drive the quarterly results.
Technological Advancements
Growth in the Medical Products space also pertains to market dynamics and shift in consumer demand, courtesy of the latest trend of robotic surgeries, Medical Mechatronics, Big-data analytics, bio printing, 3D printing, electronic health records (EHR), predictive analytics, real-time alerting and revenue cycle management services.
Evidently, companies that adopted AI technologies have witnessed a 50% reduction in healthcare costs and have also experienced improved patient outcome of more than 50%.
This along with a rise in minimally-invasive surgeries, use of IT for quick and improved patient care and the shift of the payment system to a value-based model is likely to drive profits of Medical Product companies this earnings season.
Probable Deterrents for the Medical Products Space
At the onset of the second-quarter earnings season, a series of geo-political tensions rattled the U.S. economy, the Medical Products space being no exception. Although it would be too early for these issues to dent second-quarter results, analysts believe that these might have some adverse effect on the earnings results of the Medical Product companies.
While ties between the United States and North Korea have strengthened in one, the ongoing trade war with China is a concern. This can be a serious threat to the U.S. Medical Products industry that sells about $4.7 billion worth of goods annually to China and imports a total of $5 billion of the same (an article by Christian B. Jones in Mondaq). Currently, President Trump has implemented $34 billion of import duties on Chinese goods and China imposed tariffs on U.S. exports of $3 billion.
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or #3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
So, considering the above factors, we take a look at three Medical Products companies that are set to report on Jul 26, before market opens.
Abiomed Inc’s first-quarter fiscal 2019 results will gain from its flagship Impella product line. An impressive guidance for fiscal 2019 and the company’s recent foray into the coveted S&P 500 benchmark are the tailwinds (read more: Will Flagship Impella Drive Abiomed's Q1 Earnings?).
For the quarter to be reported, the Zacks Consensus Estimate for revenues is pegged at $171.9 million, reflecting year-over-year rise of 29.8%. The Zacks Consensus Estimate for adjusted earnings per share is pegged at 80 cents, indicating a surge of 77.8% year over year. On average, the company delivered a positive earnings surprise of 22.8% over the last four quarters.
However, our quantitative Zacks model does not conclusively predict earnings beat for the company, given the combination of a Zacks Rank of 2 and an Earnings ESP of -10.78%.
ABIOMED, Inc. Price and EPS Surprise
ABIOMED, Inc. Price and EPS Surprise | ABIOMED, Inc. Quote
Baxter International Inc (BAX - Free Report) ) is expected to witness steady growth in second-quarter 2018 results, courtesy of international ventures. While this can significantly drive results, a raised guidance and strategic collaborations are other tailwinds (read more: Can International Sales Drive Baxter's Q2 Earnings?).
For the quarter under review, the Zacks Consensus Estimate for revenues is pegged at $2.84 billion, reflecting a year-over-year rise of 8.9%. The Zacks Consensus Estimate for adjusted earnings per share is pegged at 71 cents, indicating an increase of 12.7% year over year. On average, Baxter delivered a positive earnings surprise of 10.1% over the last four quarters.
The quantitative Zacks model predicts estimates beat for the company, given the combination of a Zacks Rank of 3 and an Earnings ESP of +0.90%.
Baxter International Inc. Price and EPS Surprise
Baxter International Inc. Price and EPS Surprise | Baxter International Inc. Quote
Edwards Lifesciences Corporation ((EW - Free Report) ) is expected to gain from strength in Transcatheter Heart Valve Therapy segment (THVT) in second-quarter 2018 results. Banking on constant therapy adoption across all geographies with notable strength in the United States, the company is expected to maintain this bullish trend (read more: Will Edwards' Steady Overall Growth Drive Q2 Earnings?).
For the quarter to be reported, the Zacks Consensus Estimate for revenues is pegged at $964.7 million, reflecting a year-over-year rise of 14.9%. The Zacks Consensus Estimate for adjusted earnings per share is pegged at $1.13, indicating an increase of 4.6%. On average, Edwards Lifesciences delivered a positive earnings surprise of 8.9% over the last four quarters.
The quantitative Zacks model predicts an earnings beat for the company, given the combination of a Zacks Rank of 3 and an Earnings ESP of +0.59%.
Edwards Lifesciences Corporation Price and EPS Surprise
Edwards Lifesciences Corporation Price and EPS Surprise | Edwards Lifesciences Corporation Quote
McKesson Corporation (MCK - Free Report) ) is expected to gain from strength in the core Distribution Solutions segment in first-quarter fiscal 2019 results. Distribution Solutions is one of McKesson’s key segments, which is engaged in the distribution of branded and generic pharmaceutical drugs along with other healthcare-related products (read more: Will Core Distribution Unit Aid McKesson Q1 Earnings?).
The Zacks Consensus Estimate for first-quarter revenues is pegged at $53 billion, reflecting year-over-year growth of 3.9%. The same for earnings is pegged at $2.78, mirroring year-over-year improvement of 13%. Notably, McKesson has delivered a positive average earnings surprise of 5.2% in the trailing four quarters.
However, the quantitative Zacks model does not conclusively predict earnings beat for the company, considering the combination of a Zacks Rank of 3 and an Earnings ESP of 0.00%.
McKesson Corporation Price and EPS Surprise
McKesson Corporation Price and EPS Surprise | McKesson Corporation Quote
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>