Medical Product Stocks' Q3 Earnings Due on Nov 1: SYK & More
Several large-cap Medical Product industry players have already announced third-quarter results. Of these, Abbott and Boston Scientific’s earnings and sales have beat their respective estimates. While Abbott’s earnings and revenues were slightly down year over year, the same for Boston Scientific improved during the same time frame. On a year-over-year basis, these players delivered mixed quarterly results with recovery in certain categories. A similar trend is expected to be reflected in the results of other industry players.
Some major industry players like Stryker SYK, Cencora, Inc. COR, Baxter International BAX, Fresenius Medical Care FMS and DENTSPLY SIRONA XRAY are set to report their results tomorrow.
Q3 Preview and Scorecard
Per the latest Earnings Trends report, quarterly results of the Medical sector so far have improved year over year despite the ongoing macroeconomic headwinds in the form of worldwide geopolitical issues, inflationary pressure and unfavorable foreign exchange. Going by the broader Medical sector’s scorecard, 15% of the companies, constituting 33.2% of the sector’s market capitalization, reported earnings till Oct 25. Of these, 88.9% beat on earnings and 77.8% beat on revenues. Earnings improved 7% year over year on 6.8% higher revenues.
However, the overall third-quarter earnings of the Medical sector are expected to plunge 20.9% on 5.4% revenue growth. This compares with the second-quarter earnings decline of 29.1% on revenue growth of 5%.
Factors That Influenced Medical Products Stocks
The collective business growth of the Zacks-defined Medical Products companies may have been greatly affected by the persistent economic challenges in and outside the United States in the third quarter. The U.S. dollar got stronger against several foreign currencies during the third-quarter months. This may have caused serious currency challenges for Medical Product companies that trade internationally. Their businesses may have suffered more than in the previous quarter.
The industry-wide trend shows that high unit costs and logistical issues may have hurt the profit margin of many stocks. The tough economic situation might have also limited capital investments in the third quarter, affecting the sector's performance. To deal with rising costs, the companies are speeding up their cost-cutting measures.
The consumer preferences changed sharply due to the tight monetary policy. This, in turn, reduced the demand for non-essential MedTech products. This must have lowered the companies' revenues in the third quarter on a sequential basis.
On a positive note, the companies might have seen a strong recovery in their traditional businesses and testing demand in the third quarter. AI and robotics for the medical Internet of Things, which became popular during the pandemic, remained in demand.
Medical Products Stocks to Watch
Let's take a look at five Medical product companies that are scheduled to report third-quarter 2023 earnings on Nov 2, and find out how things might have shaped up prior to the announcements.
Stryker: Robust sales growth in MedSurg and Neurotechnology segment on the back of robust performance of subsegments is likely to have continued in the third quarter. Heightened demand is expected to have contributed to the Orthopaedics & Spine segment's performance in the soon-to-be-reported quarter. Strong customer demand for its existing as well as new products is an added advantage. However, ongoing hospital staffing pressures and foreign currency movements are likely to have hurt its sales growth.
(Read more: Stryker to Report Q3 Earnings: Is a Beat in Store?)
The Zacks Consensus Estimate for Stryker’s third-quarter 2023 revenues is pegged at $4.88 billion, indicating an increase of 9% from the year-ago reported figure. The Zacks Consensus Estimate for its third-quarter 2023 EPS of $2.44 indicates a 15.1% improvement from the year-ago reported figure.
Per our proven model, a stock with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of posting an earnings beat.
SYK currently has an Earnings ESP of +0.03% and carries a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stryker Corporation Price and EPS Surprise
Stryker Corporation price-eps-surprise | Stryker Corporation Quote
Cencora: Sustained strong growth in specialty product sales, coupled with broad-based solid performance and utilization trends across the portfolio in the U.S. Healthcare Solutions segment, might have favored COR’s fiscal fourth-quarter performance. Revenues from the U.S. Healthcare Solutions segment are likely to have grown at least 9% in fiscal 2023. This may get reflected in the fiscal fourth-quarter results as well.
The International Healthcare Solutions segment’s World Courier unit is expected to have exhibited a solid performance in the quarter under review. However, the unfavorable impact of foreign currency translation and the divestiture of Profarma specialty are likely to have continued in the fiscal fourth quarter.
(Read more: Cencora to Report Q4 Earnings: What's in the Cards?)
The Zacks Consensus Estimate for Cencora’s third-quarter 2023 revenues is pegged at $66.57 billion, implying an improvement of 8.8% from the year-ago reported figure. The Zacks Consensus Estimate for third-quarter earnings is pinned at $2.79 per share, indicating an improvement of 7.3% year over year.
COR has an Earnings ESP of 0.00% and carries a Zacks Rank #2 at present.
Cencora, Inc. Price and EPS Surprise
Cencora, Inc. price-eps-surprise | Cencora, Inc. Quote
Baxter: Strong performance in international markets is likely to have driven sales of the Clinical Nutrition segment during the third quarter. However, U.S. sales are likely to have been weak. Moreover, a continued rise in surgical volume and elective surgical procedures is expected to have fueled strong growth in Advanced Surgery’s sales. The Renal Care segment’s sales reflected a recovering trend during the previous two quarters. However, a potential sales decline in China due to the impact of various government-based procurement initiatives might have continued to hurt Renal sales during the soon-to-be-reported quarter.
(Read more: Baxter to Report Q3 Earnings: Is a Beat in Store?)
The Zacks Consensus Estimate for Baxter’s third-quarter 2023 revenues is pegged at $3.71 billion, indicating a decline of 1.7% from the year-ago reported figure. The Zacks Consensus Estimate for third-quarter earnings is pinned at 66 cents per share, indicating a decline of 19.5% from the year-ago quarter’s level.
BAX has an Earnings ESP of +3.86% and a Zacks Rank #2 at present.
Baxter International Inc. Price and EPS Surprise
Baxter International Inc. price-eps-surprise | Baxter International Inc. Quote
Fresenius Medical: FMS’ results are likely to reflect improving treatment volumes as well as a stabilizing labor environment in the United States. A potential continuation of improvement in these two key factors will be beneficial for the company in the third quarter. Overall price improvements are likely to have supported growth in the Care Enablement segment. While U.S. revenues are likely to be hurt by FX, international sales may improve. Meanwhile, FMS’ newly implemented operating model is likely to have led to operational improvements. The bottom line figure might reflect inflationary cost increases in energy, material and personnel.
The Zacks Consensus Estimate for Fresenius Medical’s third-quarter 2023 revenues is pegged at $5.42 billion, indicating an increase of 5.6% from the year-ago reported figure. The Zacks Consensus Estimate for third-quarter earnings is pinned at 37 cents, indicating a year-over-year decline of 7.5%.
FMS has an Earnings ESP of 0.00% and a Zacks Rank #1 at present.
Fresenius Medical Care AG & Co. KGaA Price and EPS Surprise
Fresenius Medical Care AG & Co. KGaA price-eps-surprise | Fresenius Medical Care AG & Co. KGaA Quote
DENTSPLY SIRONA: Its Technologies & Equipment segment is likely to have witnessed organic growth in the quarter under review. Higher demand for clear aligners is expected to have driven the segment’s sales growth, partially offset by weakness in CAD/CAM. Implant sales in China are expected to have reflected the adverse impact of volume-based procurement policy in the country. This resulted in lower price per product, especially high-value products. Strong retail demand for consumable products might have benefited the Consumable segment’s sales during the to-be-reported quarter.
However, a volatile macroeconomic environment raises uncertainty. Inflationary pressure, coupled with commercial investments and restructuring and remediation costs, is likely to have fueled operating expenses during the soon-to-be-reported quarter, thereby hurting margins.
(Read more: Is a Beat Likely for DENTSPLY SIRONA in Q3 Earnings?)
The Zacks Consensus Estimate for DENTSPLY SIRONA’s third-quarter 2023 revenues is pegged at $972.8 million, indicating an improvement of 2.7% from the year-ago reported figure. The Zacks Consensus Estimate for third-quarter earnings is pinned at 48 cents per share, indicating year-over-year growth of 17.1%.
XRAY has an Earnings ESP of +1.04% and a Zacks Rank #3 at present.
DENTSPLY SIRONA Inc. Price and EPS Surprise
DENTSPLY SIRONA Inc. price-eps-surprise | DENTSPLY SIRONA Inc. Quote
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Baxter International Inc. (BAX) : Free Stock Analysis Report
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Cencora, Inc. (COR) : Free Stock Analysis Report
