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Medical Instruments' Oct 31 Earnings Roster: IDXX, ABMD & More
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Over the last few quarters, the Medical Instruments companies within the broader Medical sector put up an impressive show owing to some new strategic developments despite certain quarterly volatilities. However, this earnings season so far witnessed a slightly dented growth trend amid the ongoing US-China trade tiff and constant regulatory changes. Let us delve deeper.
Factors Likely to Drive Q3 Results
The past few months have been remarkable for the medical device space in terms of R&D. Some of the path-breaking inventions noticed in the period include implantable CRT-Ds and ICDs, wearable medical device technologies and the Internet of Things (IoT), Bio-printing, Bluetooth-enabled devices, artificial pancreas, human-brain pacemaker etc.
In this regard, it is significant to note that Johnson & Johnson’s (JNJ - Free Report) Medical Device business registered accelerated growth in its recently reported third quarter, banking on multiple product launches within Interventional Solutions. Abbott (ABT - Free Report) delivered a strong top-line improvement in third-quarter release, backed by regulatory approvals for MitraClip, Alinity and FreeStyle Libre line. For Edwards Lifesciences, within its new business of the Mitral and Tricuspid Therapies (TMTT) that achieved a CE Mark, PASCAL already started witnessing a solid rollout in Europe during the third quarter.
Robust growth in the emerging markets has already been an added positive this reporting cycle. Buoyed by the rising medical awareness and economic prosperity, flourishing economies are witnessing sturdy demand for the medical instruments. Notably, an aging population, relaxed regulations, cheap skilled labor, increasing wealth and the government focus on healthcare infrastructure make these markets a hotbed for the global medical device players.
On this front, Varian Medical Systems has also been reinforcing its capability to treat cancer in the booming economies that are but slightly under-equipped to address the prevalence of the same. Importantly, in the third quarter, Varian Medical strengthened its presence in India by acquiring Cancer Treatment Services International for $283 million. While for Boston Scientific, business from the emerging markets registered 20% growth in the same period, led by high growth in Asia and Latin America. The company currently eyes a much better performance ahead in China, backed by the rollout of SYNERGY in the region.
What's Dragging the Q3 Growth Rate Down?
The US-China trade war triggered a short-term downtrend in the Medical Instruments sector. Albeit a series of recent exemptions (the last being in September) by the U.S. Trade Representative (USTR), the entire community is anxious that this downside might reflect on third-quarter results.
According to a survey conducted by the Medical Imaging & Technology Alliance (MITA), tariffs will cost Medical Instruments companies nearly $138 million every year. This is hampering the entities’ third-quarter results. For Varian Medical Systems , the tariff exclusions in China induced expenses worth $2 million.
Additionally, continuous regulatory updates across the globe are escalating medical instrument market uncertainties. For example, earlier this year, the FDA came out with a proposed regulatory frameworkfor AI/ML (machine learning)-based SaMD (software as a medical device), which is currently a focus area in MedTech. The framework incorporating more documentation and oversight is strictly thwarting the FDA approval process by slowing down the regulatory pathway. Apart from delaying the revenue generation process, this is elevating the R&D expenses of the industry players, thereby putting pressure on their bottom line. This too has most likely affected the industry’s third-quarter performance.
The latest Earnings Preview predicts the Medical sector to deliver positive surprises this time around but suffer a sequential decline at the same time. For the quarter under review, earnings growth rate is projected at 1.2% on 5.8% revenue increase, indicating a fall from second-quarter reported earnings growth of 9.8% on 6.6% revenue rise.
What Our Model Says
The proven Zacks model predicts an earnings beat for a company with a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). This combination increases the chances of beating estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Considering the above factors, we take a look at the following four Medical Instruments players that are set to release earnings results on Oct 31.
IDEXX Laboratories, Inc. (IDXX - Free Report) : In the United States, IDEXX has been generating strong CAG Diagnostic recurring revenues, led by steady growth in reference lab, consumables and rapid assay sales. Growth in the Veterinary Software portfolio can be attributed to strength in the global catalyst install base of Cornerstone, Neo and Animana systems. These trends are expected to have continued in the to-be-reported quarter. (Read more: What's in Store for IDEXX Laboratories' Q3 Earnings?)
IDEXX has an Earnings ESP of 0.00% and a Zacks Rank #3.
ABIOMED, Inc. : We are once again optimistic about ABIOMED’s flagship product line Impella,which consistently boosted the company’s top line. Impella, a support system of percutaneous, catheter-based devices offering hemodynamic support to the heart, is expected to have driven the results in the fiscal second quarter as well.(Read more: ABIOMED to Report Q2 Earnings: What's in the Offing?)
ABIOMED has an Earnings ESP of 0.00% and a Zacks Rank #5 (Strong Sell).
Teleflex Incorporated (TFX - Free Report) : We arehopeful that this company might have delivered strong broad-based revenue growth from product and geographic perspective in the quarter to be reported. NeoTract, the acquired business of Teleflex is likely to have contributed to the company’s top line handsomely.
Teleflex is Zacks #3 Ranked and has an Earnings ESP of 0.00%.
Integer Holdings Corporation (ITGR - Free Report) : Integer Holdings is expected to have gained traction from the company’s firm focus on portfolio management and operational excellence in the third quarter. The company is also likely to have benefited from Cardio & Vascular, Neuromodulation and Non-Medical Electrochem markets.
Integer Holdings has an Earnings ESP of 0.00% and is a #3 Ranked stock.
Integer Holdings Corporation Price and EPS Surprise
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This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
Image: Bigstock
Medical Instruments' Oct 31 Earnings Roster: IDXX, ABMD & More
Over the last few quarters, the Medical Instruments companies within the broader Medical sector put up an impressive show owing to some new strategic developments despite certain quarterly volatilities. However, this earnings season so far witnessed a slightly dented growth trend amid the ongoing US-China trade tiff and constant regulatory changes. Let us delve deeper.
Factors Likely to Drive Q3 Results
The past few months have been remarkable for the medical device space in terms of R&D. Some of the path-breaking inventions noticed in the period include implantable CRT-Ds and ICDs, wearable medical device technologies and the Internet of Things (IoT), Bio-printing, Bluetooth-enabled devices, artificial pancreas, human-brain pacemaker etc.
In this regard, it is significant to note that Johnson & Johnson’s (JNJ - Free Report) Medical Device business registered accelerated growth in its recently reported third quarter, banking on multiple product launches within Interventional Solutions. Abbott (ABT - Free Report) delivered a strong top-line improvement in third-quarter release, backed by regulatory approvals for MitraClip, Alinity and FreeStyle Libre line. For Edwards Lifesciences, within its new business of the Mitral and Tricuspid Therapies (TMTT) that achieved a CE Mark, PASCAL already started witnessing a solid rollout in Europe during the third quarter.
Robust growth in the emerging markets has already been an added positive this reporting cycle. Buoyed by the rising medical awareness and economic prosperity, flourishing economies are witnessing sturdy demand for the medical instruments. Notably, an aging population, relaxed regulations, cheap skilled labor, increasing wealth and the government focus on healthcare infrastructure make these markets a hotbed for the global medical device players.
On this front, Varian Medical Systems has also been reinforcing its capability to treat cancer in the booming economies that are but slightly under-equipped to address the prevalence of the same. Importantly, in the third quarter, Varian Medical strengthened its presence in India by acquiring Cancer Treatment Services International for $283 million. While for Boston Scientific, business from the emerging markets registered 20% growth in the same period, led by high growth in Asia and Latin America. The company currently eyes a much better performance ahead in China, backed by the rollout of SYNERGY in the region.
What's Dragging the Q3 Growth Rate Down?
The US-China trade war triggered a short-term downtrend in the Medical Instruments sector. Albeit a series of recent exemptions (the last being in September) by the U.S. Trade Representative (USTR), the entire community is anxious that this downside might reflect on third-quarter results.
According to a survey conducted by the Medical Imaging & Technology Alliance (MITA), tariffs will cost Medical Instruments companies nearly $138 million every year. This is hampering the entities’ third-quarter results. For Varian Medical Systems , the tariff exclusions in China induced expenses worth $2 million.
Additionally, continuous regulatory updates across the globe are escalating medical instrument market uncertainties. For example, earlier this year, the FDA came out with a proposed regulatory frameworkfor AI/ML (machine learning)-based SaMD (software as a medical device), which is currently a focus area in MedTech. The framework incorporating more documentation and oversight is strictly thwarting the FDA approval process by slowing down the regulatory pathway. Apart from delaying the revenue generation process, this is elevating the R&D expenses of the industry players, thereby putting pressure on their bottom line. This too has most likely affected the industry’s third-quarter performance.
The latest Earnings Preview predicts the Medical sector to deliver positive surprises this time around but suffer a sequential decline at the same time. For the quarter under review, earnings growth rate is projected at 1.2% on 5.8% revenue increase, indicating a fall from second-quarter reported earnings growth of 9.8% on 6.6% revenue rise.
What Our Model Says
The proven Zacks model predicts an earnings beat for a company with a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). This combination increases the chances of beating estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Considering the above factors, we take a look at the following four Medical Instruments players that are set to release earnings results on Oct 31.
IDEXX Laboratories, Inc. (IDXX - Free Report) : In the United States, IDEXX has been generating strong CAG Diagnostic recurring revenues, led by steady growth in reference lab, consumables and rapid assay sales. Growth in the Veterinary Software portfolio can be attributed to strength in the global catalyst install base of Cornerstone, Neo and Animana systems. These trends are expected to have continued in the to-be-reported quarter. (Read more: What's in Store for IDEXX Laboratories' Q3 Earnings?)
IDEXX has an Earnings ESP of 0.00% and a Zacks Rank #3.
The above combination dims possibilities of an earnings beat this season. You can see the complete list of today’s Zacks #1 Rank stocks here.
IDEXX Laboratories, Inc. Price and EPS Surprise
IDEXX Laboratories, Inc. price-eps-surprise | IDEXX Laboratories, Inc. Quote
ABIOMED, Inc. : We are once again optimistic about ABIOMED’s flagship product line Impella,which consistently boosted the company’s top line. Impella, a support system of percutaneous, catheter-based devices offering hemodynamic support to the heart, is expected to have driven the results in the fiscal second quarter as well.(Read more: ABIOMED to Report Q2 Earnings: What's in the Offing?)
ABIOMED has an Earnings ESP of 0.00% and a Zacks Rank #5 (Strong Sell).
ABIOMED, Inc. Price and EPS Surprise
ABIOMED, Inc. price-eps-surprise | ABIOMED, Inc. Quote
Teleflex Incorporated (TFX - Free Report) : We arehopeful that this company might have delivered strong broad-based revenue growth from product and geographic perspective in the quarter to be reported. NeoTract, the acquired business of Teleflex is likely to have contributed to the company’s top line handsomely.
Teleflex is Zacks #3 Ranked and has an Earnings ESP of 0.00%.
Teleflex Incorporated Price and EPS Surprise
Teleflex Incorporated price-eps-surprise | Teleflex Incorporated Quote
Integer Holdings Corporation (ITGR - Free Report) : Integer Holdings is expected to have gained traction from the company’s firm focus on portfolio management and operational excellence in the third quarter. The company is also likely to have benefited from Cardio & Vascular, Neuromodulation and Non-Medical Electrochem markets.
Integer Holdings has an Earnings ESP of 0.00% and is a #3 Ranked stock.
Integer Holdings Corporation Price and EPS Surprise
Integer Holdings Corporation price-eps-surprise | Integer Holdings Corporation Quote
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>