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MedTech Stocks' Q1 Earnings Due on May 4: CRL, IDXX & NUVA

·6 min read

The latest Earnings Preview reflects a stable quarterly performance for the Medical sector 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 29. 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 stability in the United States on the gradual reopening of the economy even amid the rise of the new variant-led COVID-19 cases through the months of the first quarter. However, supply chain-related disruption along with hospital staffing shortages were prominent across many geographies. Also, many parts of the COVID-affected international market are still suffering due to lower cash flows and difficult economic conditions.

Overall, first-quarter earnings for the Medical sector are expected to rise 10.3% on a 13.3% sales increase. This compares unfavorably with Q4’s reported earnings growth of 27.8% and revenue growth of 14.3%.

MedTech Quarterly Synopsys

Integral to the broader Medical sector, MedTech or 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 MedTech industry over the past few months.

In the recent past, the companies within this space witnessed a steep decline in their base business. However, the results of the majority of MedTech 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. MedTech companies like Charles River Laboratories International CRL, IDEXX Laboratories IDXX, and NuVasive NUVA 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 so far have shown a decline in testing demand due to declining cases, leading to sluggish business growth for many companies.

Let’s take a look at three MedTech players scheduled to announce results on May 4.

Charles River: The Research Models and Services (RMS) segment of Charles River is likely to have gained from continued global demand for research models and associated services. The company’s ongoing initiatives to boost operating performances by HemaCare and Cellero are anticipated to have had a beneficial impact on the cell supply business. (Read more: Charles River to Report Q1 Earnings: What's in Store?)

The Zacks Consensus Estimate for the company’s first-quarter 2022 revenues is pegged at $908.13 million, suggesting a 10.1% rise over the year-ago reported figure. The Zacks Consensus Estimate for Charles River’s first-quarter 2022 earnings per share of $2.71 indicates a 7.1% uptick 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 beating estimates. However, this is not the case as you can see below.

CRL has an Earnings ESP of -0.21% 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.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Charles River Laboratories International, Inc. Price and EPS Surprise

Charles River Laboratories International, Inc. Price and EPS Surprise
Charles River Laboratories International, Inc. Price and EPS Surprise

Charles River Laboratories International, Inc. price-eps-surprise | Charles River Laboratories International, Inc. Quote

IDEXX Laboratories: The Companion Animal Group (CAG) business of IDEXX is expected to have gained from consistent and healthy organic revenue growth in the to-be-reported quarter, backed by strong performance in CAG diagnostics recurring business in the United States and internationally. Robust growth in the U.S. clinical business and continued positive demand trends are likely to have contributed to U.S. CAG Diagnostic’s recurring revenues. On its earnings call for the fourth quarter, the company noted that U.S. clinical visit growth was 2.2%, with strength across non-wellness and wellness visit categories.

For first-quarter 2022, the Zacks Consensus Estimate for total revenues of $841.2 million implies an improvement of 8.2% from the prior-year quarter’s reported figure. The consensus estimate for IDEXX’s earnings per share is pegged at $2.26, indicating a decline of 3.8% from the prior-year quarter’s reported figure. (Read more: IDEXX to Report Q1 Earnings: What's in the Cards?)

IDXX has an Earnings ESP of +1.33% and a Zacks Rank #4.

IDEXX Laboratories, Inc. Price and EPS Surprise

IDEXX Laboratories, Inc. Price and EPS Surprise
IDEXX Laboratories, Inc. Price and EPS Surprise

IDEXX Laboratories, Inc. price-eps-surprise | IDEXX Laboratories, Inc. Quote

NuVasive: NuVasive’s Q1 earnings performance is expected to have been driven by product introductions, including the Pulse platform and the C360 portfolio featuring the NuVasive Simplify Cervical Disc in the United States. The continued strong international performance and consistent growth in NuVasive’s core Spine business across the Asia Pacific, Europe, and Latin America regions raise investor confidence.

For first-quarter 2022, the Zacks Consensus Estimate for total revenues of $277.4 million implies an improvement of 2.3% from the prior-year quarter’s reported figure. The consensus estimate for earnings per share is pegged at 38 cents, indicating a 2.7% rise from the prior-year quarter’s reported figure.

NuVasive has an Earnings ESP of -17.70% and a Zacks Rank #4.

NuVasive, Inc. Price and EPS Surprise

NuVasive, Inc. Price and EPS Surprise
NuVasive, Inc. Price and EPS Surprise

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


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