3 Healthcare Stocks Set to Outshine Q3 Earnings Estimates
Rebounding patient volumes, growing demand for telehealth services, and rising outpatient surgeries and patient days are likely to boost healthcare stocks’ third-quarter 2022 results. Healthcare players are part of the broader Zacks Medical sector (one of the 16 broad Zacks sectors within the Zacks Industry classification). Technological improvements and adoptions are expected to have lowered costs for companies like Humana Inc. HUM, Teladoc Health, Inc. TDOC and Pediatrix Medical Group, Inc. MD.
With the help of the Zacks Stock Screener, we have identified three companies, HUM, TDOC and MD, which are poised to outshine the Zacks Consensus Estimate in third-quarter earnings. These stocks have the ideal combination of two ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy), #3 (Hold) — to surpass expectations. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Before we get into the details of factors that might have influenced third-quarter performance, let’s take a look at the sector projections. Per the latest Earnings Preview, the medical sector’s third-quarter 2022 earnings are estimated to decline 7.6%, while revenues are expected to increase 3.9%. Recovering volumes, improved admissions, growing health awareness and wide utilization of telehealth services are expected to have aided the companies’ revenues.
Factors to Influence Q3 Results
The healthcare space is one of the largest and most complex in the U.S. economy. It encompasses industries like hospitals, medical services, nursing homes, health insurance, medical devices, pharmaceuticals and others. A growing aging population and the rise in demand for health products and services work as constant sales boosters for companies in the healthcare market.
Improvement in patient admissions and outpatient visits in the third quarter is expected to have benefited healthcare stocks. Medical procedures that were postponed during the thick of the COVID pandemic are gaining attention from service providers. As such, the increased undertaking of deferred non-emergency procedures might have positioned healthcare providers for growth.
With labor shortages eroding margins for industry players, technological innovations and improvements are expected to have enabled the companies to optimize hospital services, minimize unnecessary expenses and enhance the patient experience. Leveraging AI and automation might have improved clinical workflow management and medical diagnosis utilized by hospitals and other healthcare companies.
Further, the companies using the virtual health domain enhance efficiency by limiting the patients’ waiting time and cutting their treatment costs. Hence, the growing demand for telehealth and telemedicine services might have boosted the profits of companies like Teladoc in the third quarter of 2022.
To expand the business scale and generate higher revenues, healthcare stocks have been committed to the M&A strategy. With an expanded healthcare portfolio, the companies are expected to have witnessed a sales boom, which might have been partially offset by escalated expenses due to the growth efforts.
Potential Q3 Outperformers
Below we list three healthcare stocksthat have the right mix of elements to pull off a beat this earnings season.
Headquartered in Louisville, KY, Humana is one of the largest health care plan providers in the United States. Its third-quarter earnings are expected to have benefited from higher premiums and customer base. Organic growth within the Medicaid business might have positioned the company for an earnings beat this time around. Cost control and improving efficiency might have aided HUM’s profit levels.
The Zacks Consensus Estimate for Humana’s third-quarter earnings is pegged at $6.24 per share, suggesting an increase of 29.2% from the year-ago reported figure. It beat earnings estimates in each of the past four quarters, with an average of 9.1%. HUM has an Earnings ESP of +1.12% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Humana Inc. Price and EPS Surprise
Humana Inc. price-eps-surprise | Humana Inc. Quote
Based in Purchase, NY, Teladoc provides virtual access to high-quality care and expertise with a large portfolio of services and solutions. Its expanding product offerings and increased visits and memberships are likely to have benefited third-quarter earnings. Solid contributions from access and visit fees are also expected to aid TDOC’s results. Growing its business in the international market might have helped in diversifying its revenue source.
The Zacks Consensus Estimate for Teladoc’s third-quarter earnings is pegged at a loss of 59 cents per share, which has improved 3.3% in the past 60 days. TDOC has an Earnings ESP of +6.35% and a Zacks Rank #3. It beat earnings estimates in each of the past four quarters, with an average of 41.3%.
Teladoc Health, Inc. Price and EPS Surprise
Teladoc Health, Inc. price-eps-surprise | Teladoc Health, Inc. Quote
Headquartered in Sunrise, FL, Pediatrix Medical provides different types of pediatric and maternal-fetal care services in the United States and Puerto Rico. Its third-quarter earnings might have gained from growing patient volumes and better net acquisition activities. Operational excellence and strong segmental performances are likely to aid its results.
The Zacks Consensus Estimate for MD’s third-quarter earnings is pegged at 53 cents per share, signaling 15.2% year-over-year growth. Pediatrix Medical has an Earnings ESP of +1.89% and a Zacks Rank #3. It beat earnings estimates in three of the past four quarters and met once, with an average surprise of 12.5%.
Pediatrix Medical Group, Inc. Price and EPS Surprise
Pediatrix Medical Group, Inc. price-eps-surprise | Pediatrix Medical Group, Inc. Quote
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