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Anthem (ANTM) to Report Q4 Earnings: What's in the Cards?

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Anthem Inc. ANTM will release fourth-quarter 2020 results on Jan 27, before market open.

In the last reported quarter, the company’s earnings of $4.20 per share beat the Zacks Consensus Estimate by 4% on the back of solid revenues.

However, the bottom line fell almost 17% year over year.

Let’s see how things are shaping up prior to the earnings announcement.

The company’s performance is likely to have taken a hit from escalating expenses and a weak Commercial business line. The Zacks Consensus Estimate for fourth-quarter earnings stands at $2.57, implying a 33.8% decline from the prior-year quarter’s reported number. The Zacks Consensus Estimate for the to-be-reported quarter’s revenues implies a 13.7% increase from the year-ago quarter’s reported figure. This upside can be attributed to rising membership and improved premiums.

Anthem is likely to have continued witnessing a surge in telehealth services, particularly in the behavorial health line. This in turn has likely contributed to its revenues.

Increase in Government business enrolment is likely to have offset the fall in commercial enrolment.

Overall, medical membership might have witnessed a spike on the back of organic growth and market share gains in Medicaid and Medicare. The consensus mark for Medical membership in Government business hints at a hike of 14.8% from the prior-year reported number while the same for Commercial business suggests a dip of 0.5%. The consensus mark for Government business revenues indicates a 15.3% improvement from the year-earlier period’s reported figure.

On its last earnings call, management had said that it expects the fourth quarter to be above baseline owing to the recent spike in COVID-19 volumes. It also anticipated the fourth-quarter result to reflect an elevated medical loss ratio due to the underlying cost of services along with high demand.

Additionally, Anthem is likely to have benefited from a steady cash flow in the fourth quarter. This, in turn, is likely to have helped Anthem sustain its share repurchase plan, which provided an additional cushion to its performance.

However, the company might have incurred higher selling, general and administrative expenses, increased spending on growth-driving projects as well as costs related to COVID-19 diagnosis.

What the Quantitative Model States

Our proven model doesn’t predict an earnings beat for Anthem this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates, which is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Anthem has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $2.57.

Anthem, Inc. Price and EPS Surprise

Anthem, Inc. Price and EPS Surprise
Anthem, Inc. Price and EPS Surprise

Anthem, Inc. price-eps-surprise | Anthem, Inc. Quote

Zacks Rank: Anthem carries a Zacks Rank #2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Here are a few stocks worth considering from the medical sector with the perfect mix of elements to beat on earnings in the respective upcoming releases:

Teladoc Health, Inc. TDOC has an Earnings ESP of +31.03% and a Zacks Rank of 2, currently.

Tenet Healthcare Corporation THC is a #1 Ranked player and has an Earnings ESP of +7.10%.

AmerisourceBergen Corporation ABC presently has a Zacks Rank of 3 and an Earnings ESP of +1.93%.

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AmerisourceBergen Corporation (ABC) : Free Stock Analysis Report
 
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