U.S. Markets open in 9 hrs 12 mins

Medical Products' Nov 7 Earnings Roster: ABC, CAH & More

Zacks Equity Research

The Medical Products companies within the broader Medical sector have been performing impressively in spite of certain quarterly volatilities. In fact, the ongoing US-China trade war is likely to have impacted the third-quarter performance of the industry participants. Nonetheless, favorable growth in the emerging markets and benefits obtained from innovation are likely to get reflected in the industry players’ performance this earnings season.

Over the past few months, the medical device space has witnessed exceptional progress when it comes to innovation — R&D to be precise. Some of the path-breaking inventions such as wireless brain sensors, Bluetooth-enabled smart inhalers, artificial pancreas, human-brain pacemaker, precision medicine, among others, have helped the medical device space to grow significantly. Abbott ABT registered strong top-line growth in the recently-reported third quarter, banking on regulatory approvals for MitraClip, Alinity and FreeStyle Libre line.

Strong demand in the emerging markets is likely to have bolstered the performance of the industry participants in this reporting cycle. According to a MedTech Dive report, as stated by Moody’s, the medical device makers are likely to exhibit mid-single-digit revenue growth fueled by product innovation across most of the companies and categories throughout 2019. Additionally, sales in emerging markets are expected to display a double-digit percentage rise over the same timeframe. Consequently, this trend is likely to get reflected in the performance of the industry players in this reporting cycle.

Backed by rising medical awareness and economic prosperity, emerging economies have been witnessing strong demand for the medical products. In fact, a geriatric population, relaxed regulations, cheap skilled labor, increasing wealth and the government focus on healthcare infrastructure make these markets attractive to the global medical device players. In this regard, Varian Medical VAR has been leveraging its capability to treat cancer in emerging economies that are slightly under-equipped to address the prevalence of the same. According to a MedTech Dive report, in May 2019, Varian Medical strengthened presence in India by acquiring Cancer Treatment Services International for $283 million.

However, the U.S. Medical Products industry has been bearing the brunt of headwinds pertaining to the U.S.-China trade war. Per a Medical Imaging & Technology Alliance (MITA) survey, tariffs will cost the companies nearly $138 million every year. This is anticipated to get reflected in the third-quarter performance of the companies in this space.

The latest Earnings Preview anticipates the Medical sector to deliver positive earnings surprises this time around although a sequential decline can be seen. For the quarter under review, earnings growth rate is projected at 6.1% on 7.1% revenue growth, compared with second-quarter reported earnings growth of 9.8% on 6.6% revenue growth.

What Our Model Says

Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Considering the above factors, we take a look at the following four Medical Products behemoths that are set to release quarterly results on Nov 7.

AmerisourceBergen Corporation ABC: Increasing volume and expanding customer base at the Pharmaceutical Distribution segment are likely to have driven the fourth-quarter fiscal 2019 revenues. This segment serves healthcare providers in the pharmaceutical supply channel. Continued strength in Specialty Distribution, solid organic growth rates in the U.S. pharmaceutical market, and improving patient access to medical care are likely to get reflected in the to-be-reported quarter’s top line. This apart, the company is likely to have benefited from generics growth in the to-be-reported quarter. Further, new product launches are likely to have contributed to overall performance. (Read more: AmerisourceBergen to Post Q4 Earnings: What’s in Store?)

AmerisourceBergen has a Zacks Rank #3 and an Earnings ESP of +0.55%. You can see the complete list of today’s Zacks #1 Rank stocks here.

AmerisourceBergen Corporation Price and EPS Surprise

 

AmerisourceBergen Corporation Price and EPS Surprise

AmerisourceBergen Corporation price-eps-surprise | AmerisourceBergen Corporation Quote

Cardinal Health, Inc. CAH: Cardinal Health’s Pharmaceutical segment is the second largest pharmaceutical distributor in the United States. Probable sales growth from pharmaceutical distribution and specialty customers is anticipated to get reflected in the Pharmaceutical segment’s first-quarter bottom line. Better-than-expected performance at this segment is likely to have driven the company’s first-quarter fiscal 2020 performance.

Cardinal Health’s Medical unit is likely to have contributed significantly to the overall third-quarter performance. In fact, the segment manufactures products such as single-use surgical drapes, gowns and apparel, exam and surgical gloves, which are anticipated to have driven sales in the to-be-reported quarter. (Read more: What’s in the Cards for Cardinal Health in Q1 Earnings?)

Cardinal Health has a Zacks Rank #3 and an Earnings ESP of +0.69%.

Cardinal Health, Inc. Price and EPS Surprise

 

Cardinal Health, Inc. Price and EPS Surprise

Cardinal Health, Inc. price-eps-surprise | Cardinal Health, Inc. Quote

DENTSPLY SIRONA Inc. XRAY: DENTSPLY SIRONA’s growth strategy focuses on product innovation, and research and development (R&D) focus, which is likely to get reflected in the top line in the third quarter. Apart from this, a solid track record of innovation and dedicated, passionate workforce is likely to have contributed to the third-quarter performance. The company’s CAD/CAM is a dental imaging platform and a major foundation in global dental markets. Product launches and innovation in this area are likely to have fueled CAD/CAM sales in the to-be-reported quarter and consequently the top line in the United States.

Execution of cost saving opportunities is likely to impact the bottom line in 2019, a trend that that is likely to get reflected in the third quarter. (Read more: What’s in Store for DENTSPLY SIRONA in Q3 Earnings?)

DENTSPLY SIRONA has a Zacks Rank of 2 and an Earnings ESP of 0.00%.

DENTSPLY SIRONA Inc. Price and EPS Surprise

 

DENTSPLY SIRONA Inc. Price and EPS Surprise

DENTSPLY SIRONA Inc. price-eps-surprise | DENTSPLY SIRONA Inc. Quote

Penumbra, Inc. PEN: Penumbra is an interventional therapies company. It designs, develops, manufactures and markets medical devices. The company's portfolio of products primarily addresses neuro and peripheral vascular medical conditions and clinical needs. Neuro products include Neurovascular Access, Neuron Access System, BENCHMARK Intracranial Access System, Penumbra System, 3D, Penumbra Coil 400, Penumbra SMART Coil and LIBERTY stent. Peripheral vascular products include Ruby Coil System, Penumbra Occlusion Device and Indigo System.

The Zacks Consensus Estimate for third-quarter 2019 revenues is pegged at $133.4 million, indicating growth of 19.3% from the year-ago reported figure. The same for earnings stands at 18 cents, suggesting an improvement of 5.9% from the year-ago quarter. In the preceding four quarters, the company outpaced the consensus mark, the average being 147.6%.

Penumbra has a Zacks Rank #3 and an Earnings ESP of 0.00%.

Penumbra, Inc. Price and EPS Surprise

 

Penumbra, Inc. Price and EPS Surprise

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

Just Released: Zacks’ 7 Best Stocks for Today

Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.5% per year.

These 7 were selected because of their superior potential for immediate breakout.

See these time-sensitive tickers now >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Abbott Laboratories (ABT) : Free Stock Analysis Report
 
Varian Medical Systems, Inc. (VAR) : Free Stock Analysis Report
 
Penumbra, Inc. (PEN) : Free Stock Analysis Report
 
DENTSPLY SIRONA Inc. (XRAY) : Free Stock Analysis Report
 
AmerisourceBergen Corporation (ABC) : Free Stock Analysis Report
 
Cardinal Health, Inc. (CAH) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research