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Will Medidata (MDSO) Continue to Surprise in Q3 Earnings?


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Medidata Solutions, Inc. (MDSO - Snapshot Report) is set to report third-quarter 2016 earnings results on Oct 25. Last quarter, the company posted earnings of 13 cents per share, which came in above the Zacks Consensus Estimate of 9 cents.
We note that Medidata surpassed the Zacks Consensus Estimate in the last four quarters, by an average of 55.05%. Let’s see how things are shaping up for this quarter.

Factors at Play

We believe Medidata will benefit from the growing adoption of products like Medidata Payment solutions, Medidata Rave, Medidata Balance and Medidata’s Risk-Based Monitoring (RBM) solutions. The professional services and subscription revenues would also enhance the growth opportunities of the company.

Medidata Solutions’ focus on Medidata Payments, a cloud-based payment technology and an add-on to its leading Medidata Clinical Cloud would benefit the company in the yet-to-be reported third quarter. Notably, Medidata Solutions has 17 out of the top 25 global Pharma companies as enterprise customers, demonstrating its accomplishment in the space. Medidata Payments is likely to fortify its position by streamlining trial processes to a considerable extent.

Performance would also get a boost from its strategic commercial partnership with SHYFT Analytics in September. The partnership will focus on providing life sciences companies with the means to gather real world evidence data from electronic medical records. It would also provide health claims information traditionally collected from clinical trials.

Earnings Whispers

Our proven model does not conclusively show that Medidata is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or at least 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Medidata currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate currently stand at 13 cents.

Zacks Rank: Medidata has a Zacks Rank #3 (Hold) which increases the possibility of an earnings beat. Though a favorable Zacks Rank makes the case stronger for an earnings beat, a 0.00% ESP leaves our surprise prediction inconclusive.

MEDIDATA SOLUTN Price and EPS Surprise



Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a few stocks worth considering that, as per our model, have the right combination of elements to post an earnings beat this quarter:

WellCare Health Plans (WCG - Snapshot Report) with an Earnings ESP of +3.60% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Achillion Pharmaceuticals, Inc. (ACHN - Analyst Report) with an Earnings ESP of +12.50% and a Zacks Rank #2 (Buy).

Ascendis Pharma (ASND - Snapshot Report) with an Earnings ESP of +10.13% and a Zacks Rank #3.


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