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MedTech Stock Q3 Earnings Roster for Oct 26: BSX, RMD & More

The latest Earnings Preview depicts a bullish run in the ongoing reporting cycle. Till Oct 20, 87 S&P 500 members (24.7% of the total market cap) reported their numbers. Total earnings for these members have gone up 9.4% on 7.3% higher revenues.

However, investors are concerned about the Medical sector (one of the 16 Zacks sectors) that saw a lot of struggle during the first nine months of the year, thanks to the political change and the ongoing policy-restructuring related battle.

The ensuing lack of visibility has roiled the favorable trend that this sector maintained in the trailing few quarters. For the third quarter, the expected earnings growth rate stands at a mere 2.2% on a 4.8% revenue-growth projection. In comparison, the second-quarter earnings growth was quite impressive at 7% on 4.4% revenue growth.

What’s in Store for the Medical Product Space?

While twists and turns continue to unfold at Capitol Hill, the scenario within the Medical - Products space, an important part of the medical device subcategory within the broader Medical sector, is getting gloomier. The latest executive order released by the Republicans points to a shrinking customer base, indicating a cut in demand for expensive medical procedures and devices. This may lead to major supply/demand disequilibrium within this space.

However, major medical device players have been pinning hopes on the abolition of the infamous 2.3% medical device sales tax, though its elimination is far from reality.

Considering these tax issues, investors interested in the Medical Product space eagerly await earnings reports of MedTech bigwigs throughout this week. Let’s take a look at the major Medical products stocks slated to release their quarterly reports on Oct 26:

Per our quantitative model, when stocks with a solid Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) are combined with a positive Earnings ESP, then chances of beating estimates are always high. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Boston Scientific Corporation BSX: We are upbeat about this medical device stalwart’s gradually improving performance in Interventional Cardiology (IC), led by an innovative portfolio and robust commercial teams, globally. The company while gaining a fair share in a few cardiovascular segments and DES (Drug Eluting Stent), continues to build momentum worldwide.

However, ahead of this earnings release, the quarter’s IC business is likely to be grossly impacted by the company’s product recall issue within Europe. While the downbeat IC business tangled under product recall issue will possibly gain some boost from the company’s recent $435 million acquisition of Switzerland-based Symetis SA, a full recovery may take time. The Zacks Consensus Estimate for third-quarter IC revenues is currently pegged at $580 million, lower than the sequentially last quarter’s reported number of $603 million.

 

Notably, the company’s earnings have outpaced the Zacks Consensus Estimate by an average of 0.84% in the trailing four quarters. Further, the Zacks Consensus Estimate for third-quarter earnings of 31 cents per share has remained unchanged over the last three months. However, it has shown a rally of 14.8% from the year-ago reported figure. The Zacks Consensus Estimate for the company’s revenues is pegged at $2.2 billion for the yet-to-be-reported quarter, an 11.5% improvement from the year-ago reported number of $2.06 billion.

Boston Scientific has an Earnings ESP of +0.20%. It also carries a Zacks Rank #2.

(Will Recall Issue Hurt Boston Scientific Q3 Earnings?)

ResMed Inc. RMD: This renowned worldwide provider of generators, masks and related accessories for the treatment of sleep-disordered breathing (SDB) is expected to gain in its first-quarter fiscal 2018 from strong performances on the domestic and international fronts. The company’s revenues in the domestic domain were driven by solid growth in devices as well as low double-digit software sales growth in the previous quarter. Internationally, the company’s receipt of French reimbursement approval for telemonitoring buoys optimism.

The Zacks Consensus Estimate for domestic revenues (including the contributions from Brightree) of $334 million reflects an increase of 10.9% from the year-ago quarter. Also, the Zacks Consensus Estimate for international revenues of $177 million indicates a rise of 7.5% from the year-ago quarter. Overall, fiscal first quarter total revenues are projected at $501 million, up 7.7% from the prior-year quarter.

ResMed Inc. Price and EPS Surprise

ResMed Inc. Price and EPS Surprise | ResMed Inc. Quote

 

Notably, the company’s earnings have outpaced the Zacks Consensus Estimate by an average of 1.7% in the trailing four quarters. ResMed carries a Zacks Rank #4 (Sell) and has an Earnings ESP of 0.00%. You can see the complete list of today’s Zacks #1 Rank stocks here.

(Read More: Can ResMed Maintain Balanced Growth in Q1 Earnings)

Align Technology Inc. ALGN: We are upbeat about Align Technology’s strategic initiatives like international expansion, ensuring Invisalign treatment for a growing base of patients. Also, the last quarter’s huge increase in international teen cases by 40.5% year over year encourages the investors. This figure reflects a rise in demand. In the quarter to be reported, the company reached a new benchmark of 1 million teen patients who had adopted the Invisalign treatment.

Management also anticipates consistent growth in the Asia-Pacific region. In a bid to flourish in this region, the company opened a new Invisalign Treatment Planning Facility in China.

 

Notably, the company’s earnings have outpaced the Zacks Consensus Estimate by an average of 16.7% in the trailing four quarters. While Align has an Earnings ESP of -0.21%, it carries a Zacks Rank #3.

The stock has seen the Zacks Consensus Estimate for third-quarter earnings of 82 cents per share being revised a penny upward over the last 7 days. It has also shown an improvement of a significant 60.8% from the year-ago tally. The Zacks Consensus Estimate for the company’s revenues is pegged at $360 million for the soon-to-be-reported quarter as compared to the year-ago reported figure of $273 million, reflecting a 31.8% gain.

 (Read More: Will Invisalign Drive Align Technology's Q3 Earnings?)

Cerner Corporation CERN: Cerner is expected to show steady growth in system sales, a major revenue component. While this could primarily drive third-quarter earnings, an expected improvement in revenues at all other segments should also help the company generate solid results this season.

The Zacks Consensus Estimate for systems sales stands at $337 million for the third quarter. This reflects a rally of almost 12% from the year-ago quarter. Growth across acute and ambulatory EHR plus sales of Population Health and Revenue Cycle solutions and services hold promise for Cerner.

Cerner Corporation Price and EPS Surprise

Cerner Corporation Price and EPS Surprise | Cerner Corporation Quote

 

Last quarter, management at Cerner announced that the company expects 3-4% growth within the Support, Maintenance & Services segment for the remaining year. In fact, the Zacks Consensus Estimate for this segment’s revenues stands at $933 million, up 8.4% on a year-over-year basis and 1.7%, sequentially.

Notably, the company’s earnings have outpaced the Zacks Consensus Estimate by an average of 0.01% in the trailing four quarters. The Zacks Consensus Estimate for third-quarter earnings of 62 cents per share has remained unchanged over the last two months. However, it has improved by 3.3% from the year-ago figure. The Zacks Consensus Estimate for the company’s revenues is pegged at $1.29 billion for the yet-to-be-reported quarter, a 4% improvement from the year-ago number of $1.24 billion.

Cerner has an Earnings ESP of -0.32%. It also carries a Zacks Rank of 2.

(Read More: Will Higher System Sales Drive Cerner's Q3 Earnings?)

Stryker Corporation SYK: In August, Stryker announced a voluntary recall of the Oral Care line-up, offered by the company’s Sage-Products unit. Added to the voluntary recall, the company had placed a temporary hold on certain cloth-based products. While this might mar third-quarter results, an expected improvement in revenues at the major revenue segments might help the company generate solid results this season.

 

Stryker delivered positive earnings surprises in the past four quarters, the average beat being 1.3%. The Zacks Consensus Estimate for third-quarter revenues stands at $2.97 billion, up 4.9% on a year-over-year basis. Also, the Zacks Consensus Estimate for earnings stands at $1.50 per share, up 8.1% year over year.

Stryker has an Earnings ESP of -0.72%. It carries a Zacks Rank of 3 as well.

(Read More: Will Sage-Unit Recall Hurt Stryker's Q3 Earnings?)

McKesson Corporation MCK: McKesson, a major player in the pharmaceutical and medical supplies distribution market, expects to gain from a gradually stabilizing generic and branded market. The company’s distribution solutions segment performed favorably in the recent times, despite weak pricing trends and customer consolidation.

The Zacks #3 Ranked company’s earnings have underperformed the Zacks Consensus Estimate by an average of 0.46% in the trailing four quarters. McKesson has an Earnings ESP of +0.72%.

 

The stock has seen the Zacks Consensus Estimate for third-quarter earnings of $2.78 per share being revised 2 cents downward over the last 30 days. It has also shown a decline of 8.9% from the year-ago reported figure. The Zacks Consensus Estimate for the company’s revenues is pegged at $51.6 billion for the yet-to-be-reported quarter as compared to the year-ago figure of $51.3 million.

 (Read More: Mckesson to Report Q2 Earnings: A Beat in the Cards?)

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Cerner Corporation (CERN): Free Stock Analysis Report
 
Boston Scientific Corporation (BSX): Free Stock Analysis Report
 
Stryker Corporation (SYK): Free Stock Analysis Report
 
ResMed Inc. (RMD): Free Stock Analysis Report
 
Align Technology, Inc. (ALGN): Free Stock Analysis Report
 
McKesson Corporation (MCK): Free Stock Analysis Report
 
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