MedTech Stocks' Q3 Earnings Due on Nov 1: IDXX, EXAS & More
Several large-cap MedTech players have already announced third-quarter results. Of these, Abbott, and Thermo Fisher surpassed earnings and sales estimates, which were already down because of the ongoing macroeconomic issues. On a year-over-year basis, these players delivered sluggish results. A similar trend is expected to be reflected in the results of the other industry players.
Some major industry players like IDEXX Laboratories IDXX, Exact Sciences EXAS, Tandem Diabetes Care TNDM and Envista NVST are set to report their results tomorrow.
Q3 Preview and Scorecard
Per the latest Earnings Preview, 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 headwinds. Going by the broader Medical sector’s scorecard, 15% of the companies in the Medical sector, constituting 33.2% of the sector’s market capitalization, reported earnings till Oct 25. Of these, 88.9% beat earnings and 77.8% beat revenue estimates. Earnings improved 7% year over year on 6.8% higher revenues.
However, 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 MedTech Stocks
Replicating the broader market trend, MedTech or the Zacks-defined Medical Products companies’ collective business growth in the third quarter is likely to have been significantly dampened by the ongoing macroeconomic threat in the United States and outside. Through the third-quarter months, the companies that are into international trade are expected to have faced severe currency headwinds. During this period, the U.S. dollar strengthened compared to several foreign currencies, which might have resulted in severe currency headwinds for MedTech companies’ businesses compared to the last reported quarter.
Further, going by the industry-wide trend, logistical challenges and increasing unit costs are likely to have weighed heavily on the corporate profitability of stocks across the board. This difficult macro environment continues to restrict capital investments in the third quarter, impacting the overall performance of the sector. At the same time, to tackle mounting expenses, the companies are accelerating their cost-reduction initiatives.
Meanwhile, the tightened monetary policy starkly altered consumer preferences and once again put the demand for the non-essential category line of MedTech businesses on the back foot. This might have, in a way, shrunk the companies’ revenues in the third quarter compared to the prior quarter.
Also, diagnostic testing companies might have once again witnessed a severe year-over-year decline in testing demand, compared to a strong comparison in the year-ago period on the rise in new COVID-19 cases in select geographies.
On a positive note, legacy-based business recovery and testing demand of the companies through the months of the third quarter are expected to have been impressive. Meanwhile, AI and robotics for the medical Internet of Things, which rose to the limelight during the pandemic phase, remained popular.
MedTech Stocks to Watch
Let's take a look at four MedTech companies that are scheduled to report third-quarter 2023 earnings on Nov 1 and find out how things might have shaped up prior to the announcements.
IDEXX: Its Companion Animal Group (“CAG”) Diagnostics recurring revenues are expected to have achieved robust gains in the United States and international regions. A higher number of premium instrument placements, solid contributions from new business gains and sustained growth in veterinary software and diagnostic imaging revenues are likely to have driven the company’s overall organic revenues in the third quarter of 2023.
(Read more: IDEXX Laboratories to Post Q3 Earnings: What's in Store?)
The Zacks Consensus Estimate for IDEXX’s third-quarter 2023 revenues is pegged at $922.8 million, suggesting an increase of 9.6% from the year-ago reported figure. The Zacks Consensus Estimate for its third-quarter 2023 EPS of $2.37 indicates a 10.2% rise 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. This is not the case as you can see below.
IDXX has an Earnings ESP of -1.57% 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.
IDEXX Laboratories, Inc. Price and EPS Surprise
IDEXX Laboratories, Inc. price-eps-surprise | IDEXX Laboratories, Inc. Quote
Exact Sciences: The company is expected to have gained in the third quarter on the successful execution of strategies to enhance Cologourd growth. During the second quarter, more than 9,000 new healthcare professionals ordered Cologuard. Per the company, till the end of the second quarter, about 75% of all U.S. primary care physicians ordered Cologuard. This trend might have continued in the third quarter as well. Further, in the third quarter, Exact Sciences might have also benefited from the implementation of several new electronic connections with large U.S. health systems.
The Zacks Consensus Estimate for Exact Sciences’ third-quarter 2023 revenues is pegged at $614.6 million, suggesting a rise of 17.5% from the year-ago reported figure. The Zacks Consensus Estimate for the third quarter stands at a loss of 49 cents, indicating an improvement from the year-ago quarter’s loss of 84 cents.
EXAS has an Earnings ESP of -15.65% and carries a Zacks Rank #3.
Exact Sciences Corporation Price and EPS Surprise
Exact Sciences Corporation price-eps-surprise | Exact Sciences Corporation Quote
Tandem Diabetes: It is expected to have gained from constant innovation to cater to consumers’ and clinical needs. Latest launches like Tandem Source — a second-generation web-based data management application that enhances clinical data visualization and provides added interface customization for users — are likely to have contributed to the third-quarter top line. Further, the Tandem Mobi insulin pump got FDA clearance in July for people with diabetes aged 6 and up. This too might have contributed to the top line in the third quarter.
The Zacks Consensus Estimate for Tandem Diabetes’ third-quarter 2023 revenues is pegged at $193.3 million, suggesting a decline of 5.5% from the year-ago reported figure. The Zacks Consensus Estimate for the bottom line is pegged at a loss of 35 cents, which indicates a deterioration from the year-ago loss of 27 cents.
Tandem Diabetes has an Earnings ESP of -4.39% and carries a Zacks Rank #3.
Tandem Diabetes Care, Inc. Price and EPS Surprise
Tandem Diabetes Care, Inc. price-eps-surprise | Tandem Diabetes Care, Inc. Quote
Envista: The company might have continued to gain in the third quarter within its Speciality Products & Technologies business, banking on strategic development, manufacturing and marketing of dental implant systems, including regenerative solutions, dental prosthetics and associated treatment software and technologies, as well as orthodontic bracket systems, aligners and lab products.
On the second-quarter earnings call, the company stated that the recently acquired Osteogenic business would be accretive to its growth in 2023 and beyond. This should be reflected in the third-quarter results itself.
The Zacks Consensus Estimate for Envista’s third-quarter 2023 revenues is pegged at $650.7 million, suggesting a rise of 3.1% from the year-ago reported figure. The Zacks Consensus Estimate for its third-quarter 2023 EPS is 46 cents, implying a decline of 2.1% on a year-over-year basis.
Envista has an Earnings ESP of -2.78% and carries a Zacks Rank #4 (Sell).
Envista Holdings Corporation Price and EPS Surprise
Envista Holdings Corporation price-eps-surprise | Envista Holdings Corporation Quote
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IDEXX Laboratories, Inc. (IDXX) : Free Stock Analysis Report
Exact Sciences Corporation (EXAS) : Free Stock Analysis Report
Tandem Diabetes Care, Inc. (TNDM) : Free Stock Analysis Report
Envista Holdings Corporation (NVST) : Free Stock Analysis Report
