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Waters (WAT) to Report Q3 Earnings: What's in the Offing?

Zacks Equity Research

Waters Corporation WAT is scheduled to report third-quarter 2019 results on Oct 29.

The company surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average positive earnings surprise being 0.82%.

Which Way Are Q3 Estimates Treading?

For third-quarter 2019, Waters expects non-GAAP earnings in the range of $2.05-$2.15 per share. The Zacks Consensus Estimate for earnings is pegged at $2.13.

The company anticipates net sales growth between 2% and 4% on a constant currency basis. The Zacks Consensus Estimate for sales is currently projected at $589.29 million.

Past-Quarter Performance

In the second quarter, Waters delivered non-GAAP earnings of $2.14 per share, which surpassed the Zacks Consensus Estimate by 1.42%. The figure also surged 10% on a year-over-year basis.

Net revenues of 599.2 million missed the Zacks Consensus Estimate of $602.2 million. However, the figure improved 0.5% from the year-ago quarter.

Let’s see how things are shaping up prior to this announcement.

Waters Corporation Price and EPS Surprise


Waters Corporation Price and EPS Surprise

Waters Corporation price-eps-surprise | Waters Corporation Quote

Factors to Consider

Waters’ momentum across the pharmaceutical market across all operating geographies especially the United States and China is likely to have benefited the third-quarter results.

In U.S. pharmaceutical market, LC and LC-MS instruments are expected to have continued performing well in the to-be-reported quarter.

Further, the company remains optimistic about growth opportunities in China. The company has been gaining traction in the generic pharma market of the country on the back of its well performing large and small molecule applications. Moreover, its large molecule applications are likely to have witnessed strong adoption rate, which is anticipated to get reflected in the third-quarter results.

Additionally, Waters’ 4+7 pilot program is expected to have gained traction in the Chinese pharmaceutical space during the quarter under review. The program is expected to have boosted generic prescription volumes and consequently its instruments.

Apart from pharma, stabilizing market conditions in China are anticipated to have aided growth in Waters’ food testing business in the third quarter.

Nevertheless, the company’s synergies in academic and governments outside of China have remained strong. Cyclic IMS and SYNAPT XS high resolution mass spec systems of the company are expected to have bolstered the adoption rate of biomedical research applications in the third quarter. Further, stabilizing trend in government funding is likely to have positively impacted Waters’ performance in the quarter under review.

In industrial market, Tandem Quad Mass Spec products and strong TA product lines are likely to have aided Waters’ third-quarter performance.

Further, the company’s mass spectrometry portfolio is anticipated to have benefited the third quarter, owing to growing demand for QDa and high-resolution mass spec systems.

All these factors are likely to have contributed to Waters’ third-quarter top-line growth.

However, impact of sluggish academic and governmental market in China is anticipated to get reflected in the company’s third-quarter results.

Additionally, the third-quarter results are likely to reflect foreign exchange headwinds.

What Our Model Says

Our proven model doesn’t conclusively predict an earnings beat for Waters this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Waters has an Earnings ESP of 0.00% and a Zacks Rank #2.

Stocks to Consider

Here are some stocks you may consider, as our proven model shows that these have the right combination of elements to post an earnings beat this quarter.

Advanced Energy Industries, Inc. AEIS has an Earnings ESP of +4.17% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Advanced Micro Devices, Inc. AMD has an Earnings ESP of +6.54% and a Zacks Rank #2.

GlaxoSmithKline plc GSK has an Earnings ESP of +3.03% and a Zacks Rank #2.

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