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These 2 Medical Stocks Could Beat Earnings: Why They Should Be on Your Radar

Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.

We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises.

2 Stocks to Add to Your Watchlist

The Zacks Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information. With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure.

The final step today is to look at a stock that meets our ESP qualifications. Teladoc (TDOC) earns a Zacks Rank #3 26 days from its next quarterly earnings release on April 26, 2023, and its Most Accurate Estimate comes in at -$0.49 a share.

By taking the percentage difference between the -$0.49 Most Accurate Estimate and the -$0.50 Zacks Consensus Estimate, Teladoc has an Earnings ESP of 3.44%.

TDOC is one of just a large database of Medical stocks with positive ESPs. Another solid-looking stock is Merck (MRK).

Merck is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on April 27, 2023. MRK's Most Accurate Estimate sits at $1.55 a share 27 days from its next earnings release.

The Zacks Consensus Estimate for Merck is $1.42, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 8.61%.

Because both stocks hold a positive Earnings ESP, TDOC and MRK could potentially post earnings beats in their next reports.

Find Stocks to Buy or Sell Before They're Reported

Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Teladoc Health, Inc. (TDOC) : Free Stock Analysis Report

Merck & Co., Inc. (MRK) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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