Medical Products Stocks' Earnings on Apr 28: TMO, BIO & More
The first-quarter earnings season for the Medical sector kicked off last week. The latest Earnings Preview reflects a strong year-over-year improvement in the quarterly performance so far this reporting cycle. Going by the sector’s scorecard, 7% of the companies in the Medical sector, constituting nearly 27.6% of the sector’s market capitalization, reported earnings till Apr 22. Of these, 100% beat earnings estimates and 75% beat the same for revenues. Earnings increased 8.4% year over year on 13.5% higher revenues.
This scorecard reflects the ongoing stability in the United States on continued economic reopening. However, a number of MedTech players witnessed severe staffing shortages and supply-chain hazards during the first quarter months, thanks to the emergence of the new COVID variants.
Overall, first-quarter earnings of the Medical sector are expected to rise 10.3% on a 13.3% sales increase. This compares with the fourth-quarter reported earnings growth of 27.8% and revenue growth of 14.3%. It is worth mentioning that the Medical sector is expected to be one of the nine sectors expected to report earnings growth in Q1 2022.
Medical Products Quarterly Synopsys
Integral to the broader Medical sector, the Zacks-defined Medical Products companies’ collective business growth is likely to have displayed improvement compared with the last year, with a significant rise in vaccination drive and a reduction in COVID-led fatality across the United States and other developed countries. The dynamic nature of the COVID-19 crisis has resulted in a rollercoaster ride for the Medical Products industry over the past few months.
In the recent past, the companies within this space had witnessed a steep decline in their base business. However, the results of the majority of medical products stocks so far have shown accelerated non-COVID business growth through the months of the first quarter compared with 2020 on a reduction in the severity of COVID-19 despite the emergence of new virus variants. Overall, the legacy base business recovery of the companies through the months of the first quarter was impressive. Medical Product companies like Thermo Fisher Scientific TMO, Bio-Rad Laboratories BIO, LabCorp LH and ResMed RMD are likely to have been impacted by these factors in Q1.
It is noteworthy to mention here that the disruptions in the form of the emergence of more contagious COVID-19 variants like Delta, Omicron and XE are still evident in many developed countries. A number of MedTech players witnessed severe staffing shortages and supply-chain hazards in the Q1 months. As a result, many industry players have witnessed a decline in their business performance on a sequential basis.
Also, the first-quarter results of the diagnostic testing companies have shown a decline in testing demand so far, due to declining cases, leading to deterred business growth for many companies.
Let’s take a look at four Medical Products players scheduled to announce results on Apr 28.
Thermo Fisher Scientific: Through the months of the first quarter, Thermo Fisher’s Analytical Instruments segment is expected to have generated strong sales banking on flourishing electron microscopy and chromatography and mass spectrometry businesses. The company is expected to report growth driven by a favorable business mix and strong volume pull through and productivity enabled by the PPI business system. (Read more: Thermo Fisher to Post Q1 Earnings: What's in Store?)
The Zacks Consensus Estimate for total revenues of $10.63 billion for the first quarter suggests a 7.3% rise from the prior-year quarter’s reported figure. The consensus mark for Thermo Fisher’s earnings of $6.17 per share indicates a 14.4% decline from the year-ago quarter’s 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 beating estimates. However, this is not the case as you can see below.
TMO has an Earnings ESP of -1.20% and carries a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Thermo Fisher Scientific Inc. Price and EPS Surprise
Thermo Fisher Scientific Inc. price-eps-surprise | Thermo Fisher Scientific Inc. Quote
You can see the complete list of today’s Zacks #1 Rank stocks here.
Bio-Rad Laboratories: Bio-Rad’s Life Science segment has been registering robust revenue growth over the past few quarters. We expect this growth momentum to have continued in the first quarter on the back of sustained sales gain in Polymerase Chain Reaction (PCR), Droplet Digital PCR (dPCR), Process Media businesses and Western Blot. The company has also been witnessing strong growth in the biopharma market for the Droplet Digital PCR platform, which is expected to have made significant contributions to the first-quarter top line. (Read more: Bio-Rad to Report Q1 Earnings: What's in the Cards?)
The Zacks Consensus Estimate for Bio-Rad’s first-quarter revenues is pegged at $678 million, which implies a decline of 6.7% from the year-ago figure. The consensus estimate for earnings per share is pegged at $2.80, suggesting a fall of 46.3% from the prior-year reported figure.
BIO has an Earnings ESP of 0.00% and a Zacks Rank #3.
BioRad Laboratories, Inc. Price and EPS Surprise
BioRad Laboratories, Inc. price-eps-surprise | BioRad Laboratories, Inc. Quote
LabCorp: LabCorp has been registering an ongoing sales rebound in the base business for both Diagnostics and Drug Development segments. However, as the effects of the pandemic subside, we expect the demand for COVID-19 testing services to have gradually declined, impacting the first-quarter sales performance. In the fourth quarter of 2021, the company experienced higher adjusted operating income and improved margins within the base business, given organic growth and LaunchPad savings. Per the fourth-quarter earnings call, the company implemented a new LaunchPad business process improvement initiative, which is anticipated to deliver $350 million in savings over the next three years. The new initiative is expected to have contributed to the company’s first-quarter margin. (Read more: LabCorp to Report Q1 Earnings: What's in the Cards?)
The Zacks Consensus Estimate for first-quarter earnings of $5.88 per share implies a 33.1% plunge from the year-ago reported figure. The consensus estimate for revenues is pegged at $4.04 billion, suggesting a 2.9% fall from the prior-year reported number.
LH has an Earnings ESP of -0.22% and a Zacks Rank #3.
Laboratory Corporation of America Holdings Price and EPS Surprise
Laboratory Corporation of America Holdings price-eps-surprise | Laboratory Corporation of America Holdings Quote
ResMed: ResMed is expected to have benefitted in the third quarter of fiscal 2022 on increased demand for sleep and respiratory care devices on the steady recovery of markets from COVID-19 impacts and a competitor’s product recall. Growth across home medical equipment and facilities-based and home-based care settings is expected to have contributed to revenue growth in the SaaS business. The continued robust uptake of ResMed’s AirSense 10 and AirSense 11 platforms buoy optimism for the company. These developments are likely to have contributed to the company’s top line in the to-be-reported quarter.
The Zacks Consensus Estimate for its fiscal third-quarter earnings per share is pegged at $1.44. Revenues are expected to be $908.7 million.
RMD has an Earnings ESP of 0.00% and a Zacks Rank #3.
ResMed Inc. Price and EPS Surprise
ResMed Inc. price-eps-surprise | ResMed Inc. Quote
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