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Anthem (ANTM) Gears Up for Q3 Earnings: What's in Store?

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Anthem Inc. (ANTM - Free Report) will release third-quarter 2019 results on Oct 23 before market open.

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is pegged at $4.84, suggesting a 27% rise from the year-ago reported figure.

In the last reported quarter, the company delivered earnings of $4.64 per share, marginally beating the Zacks Consensus Estimate by 0.7%. Additionally, the bottom line improved 9.2% year over year on the back of higher revenues.

Let’s see how things are shaping up prior to the announcement.

The company’s revenues are likely to have gained from its superior performing Government business segment. The Zacks Consensus Estimate for second-quarter revenues stands at $25.4 billion, implying a 10.6% increase from the prior-year reported number.

The consensus mark for revenues in the Government business indicates an 11.3% improvement from the year-earlier reported figure. However, the company’s commercial business segment might have witnessed a dip in revenues. The consensus estimate for the same hints at a slip of 0.4%.

Membership across its government segment is expected to have strengthened in the same time frame.

Total medical membership for the quarter to be reported is likely to have improved in the third quarter. The Zacks Consensus Estimate for medical enrollment implies 3.6% growth from the year-ago reported figure.

Moreover, Anthem is likely to have benefited from a steady cash flow in the third quarter of 2019.

The company is expected to have incurred an elevated level of selling, general and administrative expenses due to growth-related investments.

Key Developments in Q3

Anthem will be purchasing WellCare Health Plans, Inc.’s Missouri and Nebraska Medicaid plans. This move is related to the $17-billion worth pending merger of Centene Corporation and WellCare, which is expected to be completed in the first half of 2020. Subject to certain closing conditions, this deal will help Anthem gain around 300000 Medicaid members.

What the Quantitative Model States

Our proven model does not conclusively predict an earnings beat for Anthem this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Anthem has an Earnings ESP of -0.54%. This is because the Most Accurate Estimate is pegged at $4.81, lower than the Zacks Consensus Estimate of $4.84.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Anthem, Inc. Price and EPS Surprise

Anthem, Inc. Price and EPS Surprise

Anthem, Inc. price-eps-surprise | Anthem, Inc. Quote

Zacks Rank: Anthem carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult for the stock this time around.

Stocks to Consider

Some stocks worth considering from the medical sector with the perfect mix of elements to surpass estimates in the next releases are as follows:

Mednax, Inc (MD - Free Report) is set to report third-quarter earnings on Nov 1. The stock has a Zacks Rank of 3 and an Earnings ESP of +1.10%.

AmerisourceBergen Corporation (ABC - Free Report) is slated to announce third-quarter earnings on Nov 7. The stock has an Earnings ESP of +0.55% and is Zacks #3 Ranked.

Molina Healthcare, Inc (MOH - Free Report) is set to report third-quarter earnings on Oct 29. The stock has a Zacks Rank of 1 and an Earnings ESP of +0.92%.

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