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Healthcare Stock Q1 Earnings Due on Apr 29: ANTM, HUM, AVTR

Zacks Equity Research

As the coronavirus pandemic continues to wreak havoc on the global stock market, the healthcare industry, which is part of the medical sector, is too reeling under its adversity.

However, the immediate impact of the COVID-19 outbreak is expected to have been less severe on first-quarter 2020 earnings as damages due to business losses started affecting from the second half of March onward.

Factors to Impact Q1 Results

In the first quarter of 2020, the health insurers are expected to have witnessed a rise in revenues on higher premiums across Commercial, Medicare Advantage and Medicaid insurance plans.

Significantly, the COVID-19 pandemic is likely to have offered some relief to insurers’ Medical Loss Ratio (MLR), which is the ratio of premium spent on claims.

With the cancellation of elective surgeries healthcare spending declined. This, in turn, offset the additional costs of COVID-19 care, which is expected to have enhanced profits for the U.S. health insurers.

As the hospital’s elective procedures and surgeries are put on hold, the same is expected to have positively impacted health insurers’ Medical Loss Ratio (MLR) in the form of lower claim outgo. However, this upside might have been moderately felt in the first quarter and will likely be more visible in the future quarters. A decline in MLR is expected to have aided insurers’ margins in the to-be-reported quarter.

However, decreased interest rates might have hurt investment income in the to-be-reported quarter because of low investment yields.

Moreover, the healthcare players anticipate a rise in the operating costs due to investments in adapting technology. In fact, some already waived costs for coronavirus tests and treatments, which in turn, might have weighed on the margins.

The latest Earnings Preview indicates that total earnings for the Medical sector, which comprises the health insurance industry, are expected to be up 3.1% while revenues are projected to be 8.1% higher year over year.

Let’s take a look at the following three healthcare stocks that are slated to report first-quarter 2020 results on Apr 29.

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chance of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Anthem, Inc.’s ANTM performance is likely to have been driven by increased revenues. The Zacks Consensus Estimate for first-quarter revenues stands at $28.7 billion, implying a 17.7% increase from the prior-year reported number. Several factors, such as improved premiums and rising membership are likely to have fueled growth for this metric.
The company is likely to have witnessed strength in Medicaid members on the back of contract wins.

Additionally, Anthem is likely to have benefited from a steady cash flow in the first quarter.

However, the company might have incurred heavy selling, general and administrative expenses due to growth-related investments.

Our proven model predicts an earnings beat for Anthem this time around.

Anthem has a Zacks Rank #3 and an Earnings ESP of +1.28%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

(Read More: What's in the Cards for Anthem's Earnings in Q1?)

Anthem, Inc. Price and EPS Surprise

Anthem, Inc. Price and EPS Surprise

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

Humana Inc.’s HUM top line is likely to have witnessed an upside in the first quarter owing to higher premiums and its strong Medicaid and Medicare lines of businesses.

Notably, the consensus mark for revenues of $18.4 billion hints at a 14.8% rise from the prior-year reported number.

However, its specialty membership might have been partially affected by membership migration. The company’s results might reflect on escalating growth-related investments.

Our proven model predicts an earnings beat for Humana this season.

Humana has an Earnings ESP of +11.37% and a Zacks Rank of 3.

(Read More: Humana Gears up for Earnings in Q1: What to Expect)

Humana Inc. Price and EPS Surprise

Humana Inc. Price and EPS Surprise

Humana Inc. price-eps-surprise | Humana Inc. Quote

Avantor, Inc. AVTR manufactures, distributes and sells products and services in the biopharma, healthcare, education and government, and advanced technologies and applied materials industries.

Our proven model does not predict an earnings beat for Avantor this time around. The company is Zacks #3 Ranked and has an Earnings ESP of -11.65%.

Avantor, Inc. Price and EPS Surprise

Avantor, Inc. Price and EPS Surprise

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

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