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Look at Jul 27 Medical Instrument Earnings: HOLX, VAR & More

Zacks Equity Research

Although the Q2 earnings season has so far demonstrated a slight improvement from the worrying numbers reported in the last two quarters, the overall earnings picture is still quite dreary. Analysts are apprehensive of whether this season will be the fifth in a row to log an earnings decline for the S&P 500 index or whether it will be the beginning of a change of this distressing trend.

As per our latest Earnings Trends report, so far 126 S&P 500 members (as of Jul 22) have reported their quarterly numbers with almost 189 members still to report. Whatever the earnings trend will prove to be, there is some definite good news for investors keen on the Medical sector.

As per the report, Medical is one of the 7 broader sectors among the 16 Zacks sectors which are expected to report earnings growth. The sector is expected to deliver 1.8% earnings growth on the back of 7.7% higher revenues in the second quarter.

What’s in Store for the Med-Instrument Space?

Medical instrument, a niche area under the medical device subcategory within the broader Medical sector, holds a lot of promise at this moment. This comes as no revelation, even in the face of severe economic instability, fierce competition, and increasing cost related hazards springing from regulatory complexities. The primary reason behind the success of the medical instrument industry is its execution of some top strategic priorities, which include R&D and product development along with strategic M&A and alliances with a keen focus on emerging market expansion.

Let’s take a look at the major Medical Instruments stocks slated to release their quarterly reports this week:

Hologic Inc. HOLX: This company manufactures medical diagnostics, imaging systems and surgical products. Hologic will report third-quarter fiscal 2016 financial numbers on Jul 27, after the closing bell. Management is enthusiastic about the prospects of the company’s mammography business with its 3D Genius system currently catering to only 20% of the concerned market. However, the year-over-year growth rate for the company’s U.S. breast health business might be sluggish due to higher comparable figures observed in the third quarter of the last fiscal.

We expect Hologic to beat expectations in the to-be-reported quarter as it currently carries a Zacks Rank #2 (Buy) and has a favorable Earnings ESP of +2.13%. That is because the Most Accurate estimate stands at 48 cents while the Zacks Consensus Estimate is lower at 47 cents. While a favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise, a bullish Zacks rank increases the predictive power of the ESP. 

(Read More: Hologic Q3 Earnings: A Surprise in the Cards?)

HOLOGIC INC Price and EPS Surprise

HOLOGIC INC Price and EPS Surprise | HOLOGIC INC Quote

Varian Medical Systems, Inc. VAR: Headquartered in Palo Alto, CA, Varian Medical Systems is the world’s leading provider of radiotherapy, radiosurgery, proton therapy and brachytherapy for treating cancer and other medical conditions. We believe that Varian Medical's oncology business has considerable growth potential in the long run. Moreover, China, India, Brazil (despite showing weakness in the second quarter), the Middle East and Africa present significant top-line growth opportunities for Varian. Further, Varian’s strong product pipeline is a key growth catalyst.

Varian is expected to report third-quarter fiscal 2016 numbers on Jul 27, after the market closes. We expect the company to beat our earnings estimates as it has the favorable combination of a Zacks Rank #3 (Hold) and an Earnings ESP of +0.86%.

(Read More: Varian: What's in Store for the Stock in Q3 Earnings?)

VARIAN MEDICAL Price and EPS Surprise

VARIAN MEDICAL Price and EPS Surprise | VARIAN MEDICAL Quote

Novadaq Technologies Inc. NVDQ: This company is a provider of fluorescence imaging products for use by surgeons in the operating room and other clinical settings in the United States and internationally. The stock is slated to release its second-quarter financial numbers on Jul 27, after the closing bell. Novadaq currently sports a Zacks Rank #1 (Strong Buy) and has an Earnings ESP of -7.14%. That is because both the Most Accurate estimate is at a loss of 15 cents while the Zacks Consensus Estimate is higher at a loss of 14 cents. Last quarter, the company posted a positive earnings surprise of 22.22%.

NOVADAQ TEC INC Price and EPS Surprise

NOVADAQ TEC INC Price and EPS Surprise | NOVADAQ TEC INC Quote

RTI Surgical Inc. RTIX: This medical device manufacturer develops orthopedic and other surgical implants for use in various surgical procedures globally. The company provides natural tissue implants, as well as metal and synthetic implants for the treatment of spinal and other orthopedic disorders. RTI Surgical is scheduled to release second-quarter financial numbers on Jul 27, before the opening bell. The company carries a Zacks Rank #3 (Hold) and has an Earnings ESP of 0.00%. That is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 3 cents.

We note that the company’s earnings surpassed the Zacks Consensus Estimate in two of the four trailing quarters, with an average beat of 26.25%.

RTI SURGICAL Price and EPS Surprise

RTI SURGICAL Price and EPS Surprise | RTI SURGICAL Quote

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VARIAN MEDICAL (VAR): Free Stock Analysis Report
 
HOLOGIC INC (HOLX): Free Stock Analysis Report
 
RTI SURGICAL (RTIX): Free Stock Analysis Report
 
NOVADAQ TEC INC (NVDQ): Free Stock Analysis Report
 
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