The Medical Products companies within the broader Medical sector have been performing impressively in spite of certain quarterly volatilities. In fact, the ongoing US-China trade war is likely to have impacted the third-quarter performance of the industry participants. Nonetheless, favorable growth in the emerging markets and benefits obtained from innovation are likely to get reflected in the companies’ performance in this space this earnings season.

Over the past few months, the medical device space has witnessed exceptional progress when it comes to innovation — R&D to be precise. Some of the path-breaking inventions such as wireless brain sensors, Bluetooth-enabled smart inhalers, artificial pancreas, human-brain pacemaker, precision medicine, among others, have helped the medical device space to grow significantly. Abbott (ABT Quick QuoteABT - Free Report) registered strong top-line growth in the recently-reported third quarter, banking on regulatory approvals for MitraClip, Alinity and FreeStyle Libre line.

Strong demand in the emerging markets is likely to have bolstered the performance of the industry participants in this reporting cycle. According to a MedTech Dive report, as stated by Moody’s, the medical device makers are likely to exhibit mid-single-digit revenue growth fueled by product innovation across most of the companies and categories throughout 2019. Additionally, sales in emerging markets are expected to display a double-digit percentage rise over the same timeframe. Consequently, this trend is likely to get reflected in the performance of the industry players in this reporting cycle.

Backed by rising medical awareness and economic prosperity, emerging economies are witnessing strong demand for the medical products. In fact, a geriatric population, relaxed regulations, cheap skilled labor, increasing wealth and the government focus on healthcare infrastructure make these markets attractive to the global medical device players. In this regard, Varian Medical has been leveraging its capability to treat cancer in emerging economies that are slightly under-equipped to address the prevalence of the same. According to a MedTech Dive report, in May 2019, Varian Medical strengthened presence in India by acquiring Cancer Treatment Services International for $283 million.

However, the U.S. Medical Products industry has confronted short-term hurdles pertaining to the trade war with China. Per a Medical Imaging & Technology Alliance (MITA) survey, tariffs will cost the companies nearly $138 million every year. This is anticipated to get reflected in the third-quarter performance of the companies in this space.

The latest Earnings Preview anticipates the Medical sector to deliver positive earnings surprises this time around although a sequential decline can be seen. For the quarter under review, earnings growth rate is projected at 0.5% on 5.4% revenue growth. This compares with second-quarter reported earnings growth of 9.8% on 6.6% revenue growth.

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Considering the above factors, we take a look at the following four Medical Products behemoths that are set to release quarterly results on Oct 24.

Baxter International Inc. (BAX Quick QuoteBAX - Free Report) : New product launches and the ongoing rollout of PrisMax next-generation technology for continuous renal replacement therapy (CRRT) and Therapeutic Plasma Exchange is likely to have contributed to Baxter’s Acute Therapies business and consequently the segment’s top line in the third quarter. Additionally, continued focus on geographic expansion is anticipated to get reflected in the to-be-reported quarter’s revenues. Moreover, the top line is anticipated to reflect benefits of Baxter’s strong product portfolio, and the planned launch of therapies and products. However, headwinds related to Baxter’s U.S. business and exit of the in-center hemo dialysis Bloodline business are likely to have affected the core Renal Care arm  (read more: What’s in the Offing for Baxter’s Earnings in Q3?).

Baxter has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cerner Corporation : Management at Cerner expects bookings revenues between $1.50 billion and $1.70 billion in the third quarter. The mid-point of this range reflects an improvement of 1% from the prior-year quarter. This improvement can be attributed to several large, long-term deals in the pipeline. Additionally, the Zacks Consensus Estimate for third quarter bookings is pegged at $1.62 billion, indicating an improvement of 2.3% from the year-ago quarter.

Anticipated improvement in revenues across professional and managed services segments, and licensed software business line is likely to have contributed to the company’s top line in the third quarter. However, the company is likely to have experienced contraction in operating margin in the third quarter primarily thanks to headwinds like non-cash software amortization and depreciation, traditional software revenue growth challenges. (read more: Cerner to Report Q3 Earnings: What’s in the Offing?).

Cerner has a Zacks Rank #4 (Sell) and an Earnings ESP of +0.82%.

Laboratory Corporation of America Holdings (LH Quick QuoteLH - Free Report) : The company advanced its companion diagnostics and oncology capabilities in the third quarter with the introduction of two new companion diagnostic tests, namely PIK3CA for breast cancer and FGFR for bladder cancer. This might have contributed to the company’s third-quarter results. Moreover, the company is highly optimistic about the Phase II of LaunchPad initiative in Diagnostics, which is expected to deliver $200 million of savings in another three years. Notably, this program is likely to have boosted the company’s operational efficiency in the third quarter. (read more: What’s in the Offing for LabCorp’s Earnings in Q3?).

Laboratory Corporation has a Zacks Rank of 4 and an Earnings ESP of -0.16%.

ResMed Inc. (RMD Quick QuoteRMD - Free Report) : ResMed holds a major position as designer, manufacturer, and distributor in the worldwide market for generators, masks, and related accessories for the treatment of sleep-disordered breathing (SDB) and other respiratory disorders. This San Diego CA-based company’s portfolio of products includes airflow generators, diagnostic products, mask systems, headgear and other accessories.

The Zacks Consensus Estimate for third-quarter 2019 revenues is pegged at $657.2 million, indicating growth of 11.7% from the year-ago reported figure. The same for earnings stands at 87 cents, suggesting an improvement of 7.4% from the year-ago quarter. In the preceding four quarters, the company outpaced the consensus mark, the average being 3.9%.

ResMed has a Zacks Rank #1 and an Earnings ESP of +12.64%.

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