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Medical Product Earnings Lineup for Oct 25: SYK, CERN & More
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The earnings season has seen releases from 84 members of the S&P 500 index till Oct 19.
Performances of these index participants indicate a 19.2% increase in total earnings on 8.4% higher revenues. Per our latest Earnings Preview, the beat ratio is also impressive, with 82.1% companies surpassing bottom-line expectations and 61.9% outperforming on the top-line front.
Based on the pattern, third-quarter 2018 is anticipated to register healthy double-digit percentage earnings growth on a year-over-year basis. As a whole, earnings of the S&P 500 companies are expected to grow 19.2% from the year-ago quarter’s figures on 7.2% rise in revenues, by the end of the season.
What’s in the Cards for Medical Products Space?
The Medical sector, which includes Medical Products, is likely to put up a strong show this earnings season. Favorable exposure to AI-based applications, medical mechatronics, robotics, cloud computing, big-data applications, gene editing, DNA sequencing and EHRs have empowered the medical products space. Further, the U.S. medical product companies are currently benefitting from R&D innovation, courtesy of the 2.3% Medical Device tax abolition earlier in 2018. Experts widely believe that earnings growth in the medical products space is likely to improve steadily until the end of 2018, as the effect of tax cuts gradually percolates.
Buoyed by the solid trends, our Earnings Trends report forecasts the projected earnings growth rate of the sector to be 8.4% on 6.6% revenue improvement (as of Oct 17).
However, the U.S.-China trade war is gradually becoming more intense with no signs of respite. The Trump administration announced a new round of tariffs (almost 10%) on about $200 billion on Chinese imports in September. Not to forget, a significant amount of these imports are medical products, devices and medical imaging components.Needless to say, this has triggered a short-term downtrend in the sector. Although it would be too early for these issues to dent third-quarter results, analysts believe that these might have some adverse effect on the earnings results of the healthcare companies.
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 four medical products companies that are set to release results on Oct 25.
ResMed Inc (RMD - Free Report) is slated to report first-quarter fiscal 2019 results, after market close. The company has a Zacks Rank #3 and an Earnings ESP of 0.00%, a combination that hints at slim chances of a beat this reporting cycle.
ResMed is expected to gain from a strong performance on the domestic as well as international front and sustain the momentum from the preceding quarter.
In the last reported quarter, ResMed posted adjusted earnings per share (EPS) of 95 cents, up 23.4% from the prior-year quarter’s figure. The figure beat the Zacks Consensus Estimate of 90 cents by 5.6%.
For the quarter to be reported, the Zacks Consensus Estimate for earnings is pegged at 81 cents per share, reflecting growth of 22.7% year over year. The same for revenues is pinned at $576.6 million, reflecting an increase of 10.1% year over year.
Stryker Corporation ((SYK - Free Report) ) is slated to report third-quarter 2018 results, after market close. The company has a Zacks Rank #3 and an Earnings ESP of -0.05%, a combination that indicates negative earnings surprise this reporting cycle.
While Stryker’s core MedSurg segment is likely to put up a strong show in the quarter to be reported, sluggishness in the Spine business might partially mar results (read more: Will Core MedSurg Segment Aid Stryker's Q3 Earnings?).
In the last reported quarter, Stryker posted adjusted EPS of $1.76, beating the Zacks Consensus Estimate by 1.7%. Earnings improved 15% year over year.
The Zacks Consensus Estimate for third-quarter EPS is pegged at $1.68, reflecting year-over-year growth of 10.5%. The same for revenues is pinned at $3.26 billion, showing growth of 8.4% year over year.
McKesson Corporation (MCK - Free Report) is slated to report second-quarter fiscal 2019, before market opens. The company has a Zacks Rank #3 and an Earnings ESP of +0.17%, a combination that indicates positive earnings surprise this reporting cycle.
McKesson’s core business units — U.S. Pharmaceutical and Specialty Solutions as well as European Pharmaceutical Solutions — are likely to drive quarterly results. A strong guidance for fiscal 2019 is also encouraging (read more: Will Core Business Units Aid McKesson's Q2 Earnings?).
In the last reported quarter, McKesson reported adjusted earnings of $2.90 per share, beating the Zacks Consensus Estimate of $2.89. Adjusted earnings improved 17.9% year over year.
For the quarter to be reported, the Zacks Consensus Estimate for revenues is pegged at $53.56 billion, reflecting year-over-year growth of 2.9%. The same for earnings is pegged at $3.28, flat on a year-over-year basis.
Cerner Corporation’s ) third-quarter 2018 results are scheduled to release after market close.The company has a Zacks Rank #3 and an Earnings ESP of -0.11%, a combination that hints at slim chances of a beat. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cerner is likely to witness soft results owing to decline in revenues in the core Support, Maintenance and Services segment. A positive guidance is encouraging (read more: What's in Store for Cerner This Earnings Season?).
In the last reported quarter, the Missouri-based MedTech giant posted adjusted EPS of 62 cents, which beat the Zacks Consensus Estimate by 3.3%. Earnings also improved by a penny from the year-ago quarter’s figure.
For the quarter to be reported, the Zacks Consensus Estimate for earnings is pegged at 63 cents, reflecting year-over-year growth of 3.3%. The same for revenues is pinned at $1.36 billion, reflecting year-over-year growth of 6.7%.
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Medical Product Earnings Lineup for Oct 25: SYK, CERN & More
The earnings season has seen releases from 84 members of the S&P 500 index till Oct 19.
Performances of these index participants indicate a 19.2% increase in total earnings on 8.4% higher revenues. Per our latest Earnings Preview, the beat ratio is also impressive, with 82.1% companies surpassing bottom-line expectations and 61.9% outperforming on the top-line front.
Based on the pattern, third-quarter 2018 is anticipated to register healthy double-digit percentage earnings growth on a year-over-year basis. As a whole, earnings of the S&P 500 companies are expected to grow 19.2% from the year-ago quarter’s figures on 7.2% rise in revenues, by the end of the season.
What’s in the Cards for Medical Products Space?
The Medical sector, which includes Medical Products, is likely to put up a strong show this earnings season. Favorable exposure to AI-based applications, medical mechatronics, robotics, cloud computing, big-data applications, gene editing, DNA sequencing and EHRs have empowered the medical products space. Further, the U.S. medical product companies are currently benefitting from R&D innovation, courtesy of the 2.3% Medical Device tax abolition earlier in 2018. Experts widely believe that earnings growth in the medical products space is likely to improve steadily until the end of 2018, as the effect of tax cuts gradually percolates.
Buoyed by the solid trends, our Earnings Trends report forecasts the projected earnings growth rate of the sector to be 8.4% on 6.6% revenue improvement (as of Oct 17).
However, the U.S.-China trade war is gradually becoming more intense with no signs of respite. The Trump administration announced a new round of tariffs (almost 10%) on about $200 billion on Chinese imports in September. Not to forget, a significant amount of these imports are medical products, devices and medical imaging components.Needless to say, this has triggered a short-term downtrend in the sector. Although it would be too early for these issues to dent third-quarter results, analysts believe that these might have some adverse effect on the earnings results of the healthcare companies.
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 four medical products companies that are set to release results on Oct 25.
ResMed Inc (RMD - Free Report) is slated to report first-quarter fiscal 2019 results, after market close. The company has a Zacks Rank #3 and an Earnings ESP of 0.00%, a combination that hints at slim chances of a beat this reporting cycle.
ResMed is expected to gain from a strong performance on the domestic as well as international front and sustain the momentum from the preceding quarter.
In the last reported quarter, ResMed posted adjusted earnings per share (EPS) of 95 cents, up 23.4% from the prior-year quarter’s figure. The figure beat the Zacks Consensus Estimate of 90 cents by 5.6%.
For the quarter to be reported, the Zacks Consensus Estimate for earnings is pegged at 81 cents per share, reflecting growth of 22.7% year over year. The same for revenues is pinned at $576.6 million, reflecting an increase of 10.1% year over year.
ResMed Inc. Price and Consensus
ResMed Inc. Price and Consensus | ResMed Inc. Quote
Stryker Corporation ((SYK - Free Report) ) is slated to report third-quarter 2018 results, after market close. The company has a Zacks Rank #3 and an Earnings ESP of -0.05%, a combination that indicates negative earnings surprise this reporting cycle.
While Stryker’s core MedSurg segment is likely to put up a strong show in the quarter to be reported, sluggishness in the Spine business might partially mar results (read more: Will Core MedSurg Segment Aid Stryker's Q3 Earnings?).
In the last reported quarter, Stryker posted adjusted EPS of $1.76, beating the Zacks Consensus Estimate by 1.7%. Earnings improved 15% year over year.
The Zacks Consensus Estimate for third-quarter EPS is pegged at $1.68, reflecting year-over-year growth of 10.5%. The same for revenues is pinned at $3.26 billion, showing growth of 8.4% year over year.
Stryker Corporation Price and Consensus
Stryker Corporation Price and Consensus | Stryker Corporation Quote
McKesson Corporation (MCK - Free Report) is slated to report second-quarter fiscal 2019, before market opens. The company has a Zacks Rank #3 and an Earnings ESP of +0.17%, a combination that indicates positive earnings surprise this reporting cycle.
McKesson’s core business units — U.S. Pharmaceutical and Specialty Solutions as well as European Pharmaceutical Solutions — are likely to drive quarterly results. A strong guidance for fiscal 2019 is also encouraging (read more: Will Core Business Units Aid McKesson's Q2 Earnings?).
In the last reported quarter, McKesson reported adjusted earnings of $2.90 per share, beating the Zacks Consensus Estimate of $2.89. Adjusted earnings improved 17.9% year over year.
For the quarter to be reported, the Zacks Consensus Estimate for revenues is pegged at $53.56 billion, reflecting year-over-year growth of 2.9%. The same for earnings is pegged at $3.28, flat on a year-over-year basis.
McKesson Corporation Price and Consensus
McKesson Corporation Price and Consensus | McKesson Corporation Quote
Cerner Corporation’s ) third-quarter 2018 results are scheduled to release after market close.The company has a Zacks Rank #3 and an Earnings ESP of -0.11%, a combination that hints at slim chances of a beat. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cerner is likely to witness soft results owing to decline in revenues in the core Support, Maintenance and Services segment. A positive guidance is encouraging (read more: What's in Store for Cerner This Earnings Season?).
In the last reported quarter, the Missouri-based MedTech giant posted adjusted EPS of 62 cents, which beat the Zacks Consensus Estimate by 3.3%. Earnings also improved by a penny from the year-ago quarter’s figure.
For the quarter to be reported, the Zacks Consensus Estimate for earnings is pegged at 63 cents, reflecting year-over-year growth of 3.3%. The same for revenues is pinned at $1.36 billion, reflecting year-over-year growth of 6.7%.
Cerner Corporation Price and Consensus
Cerner Corporation Price and Consensus | Cerner Corporation Quote
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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