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Medical Products' Oct 30 Earnings Roster: MCK, MASI & 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 industry participants’ third-quarter performance. Nonetheless, favorable growth in the emerging markets and benefits obtained from innovation are likely to get reflected in the companies’ performance in this space 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 are 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 confronted short-term hurdles pertaining to the trade war with China. 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 industry players.

The latest Earnings Preview anticipates the Medical sector to deliver positive earnings surprises this time around although a sequential decline is likely. For the quarter under review, earnings growth rate is projected at 1.2% on 5.8% 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 Oct 30.

McKesson Corporation MCK: McKesson expects second-quarter fiscal 2020 results to reflect segmental strength. The U.S. Pharmaceutical and Specialty Solutions segment is likely to have driven the second-quarter performance. In the last reported quarter, the segment had accounted for 79.3% of total revenues. Notably, the segment is likely to have benefited from branded, generic and over-the-counter pharmaceuticals. Moreover, the company’s broad spectrum of specialty biopharmaceutical providers and manufacturers are expected to have contributed significantly to the second-quarter performance.

Apart from this, contributions from the Medical-Surgical Solutions segment, driven by acquisitions and growth in the Primary Care and Extended Care businesses, is anticipated to get reflected in the second-quarter performance. Notably, the acquisition of Medical Specialties Distributor is expected to have driven the to-be-reported quarter’s performance. However, management expects the European Pharmaceutical Solutions unit’s adjusted operating profit growth to be at the low end of its original assumption, thanks to headwinds in Europe. (Read more: McKesson to Report Q2 Earnings: What’s in the Offing?)

McKesson has a Zacks Rank #2 and an Earnings ESP of -1.11%. You can see the complete list of today’s Zacks #1 Rank stocks here.

McKesson Corporation Price and EPS Surprise

 

McKesson Corporation Price and EPS Surprise

McKesson Corporation price-eps-surprise | McKesson Corporation Quote

Masimo Corporation MASI: Masimo develops, manufactures, and markets noninvasive monitoring technologies worldwide.  The company offers Masimo Signal Extraction Technology (SET) pulse oximetry with measure-through motion and low perfusion pulse oximetry monitoring to address the primary limitations of conventional pulse oximetry. This Irvine CA-based has two segments: Product Revenues, Royalty & Other revenues.

The Zacks Consensus Estimate for third-quarter 2019 revenues is pegged at $220.9 million, indicating growth of 4.9% from the year-ago reported figure. The same for earnings stands at 71 cents per share, remaining flat from the year-ago quarter. The company outpaced the consensus mark in the preceding four quarters, with an average positive earnings surprise of 7.3%.

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

Masimo Corporation Price and EPS Surprise

 

Masimo Corporation Price and EPS Surprise

Masimo Corporation price-eps-surprise | Masimo Corporation Quote

LivaNova PLC LIVN: LivaNova is a medical device company that designs, develops, manufactures, and sells therapeutic solutions worldwide. Headquartered in London, the U.K., the company operates in two segments, Cardiovascular (CV) and Neuromodulation (NM).

The Zacks Consensus Estimate for third-quarter 2019 revenues is pegged at $272.8 million, indicating growth of 0.3% from the year-ago reported figure. The same for earnings stands at 72 cents per share, suggesting a decline of 7.7% from the year-ago quarter. The company has a negative surprise of 0.2% in the preceding four quarters.

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

LivaNova PLC Price and EPS Surprise

 

LivaNova PLC Price and EPS Surprise

LivaNova PLC price-eps-surprise | LivaNova PLC Quote

NuVasive, Inc. NUVA: NuVasive is one of the leading global medical device companies in the global spine market, focused on developing minimally-disruptive surgical products and procedurally-integrated solutions for the spine. This San Diego, CA-based current product portfolio is focused on applications for spine fusion surgery.

The Zacks Consensus Estimate for third-quarter 2019 revenues is pegged at $283.6 million, indicating growth of 4.6% from the year-ago reported figure. The same for earnings stands at 54 cents, suggesting decline of 3.6% from the year-ago quarter. In the preceding four quarters, the company outpaced the consensus mark, the average being 10.1%.

NuVasive has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%.

NuVasive, Inc. Price and EPS Surprise

 

NuVasive, Inc. Price and EPS Surprise

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


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Abbott Laboratories (ABT) : Free Stock Analysis Report
 
Varian Medical Systems, Inc. (VAR) : Free Stock Analysis Report
 
Masimo Corporation (MASI) : Free Stock Analysis Report
 
NuVasive, Inc. (NUVA) : Free Stock Analysis Report
 
McKesson Corporation (MCK) : Free Stock Analysis Report
 
LivaNova PLC (LIVN) : Free Stock Analysis Report
 
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