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Medical Product Stocks' Earnings on Feb 6: BDX, LH & More

Zacks Equity Research
Updated

The fourth-quarter earnings season has taken center stage, with 251 S&P 500 members having reported their numbers. The season has turned out to be favorable so far, especially on the revenue front. A sturdy revenue momentum was witnessed in the season, above-average proportion of positive surprises along with favorable revisions trend for the present and the upcoming quarters.

Per the latest Earnings Preview, total earnings for the companies that have reported their results, are up 16% year over year on 10.5% higher revenues. Of the total companies, 80.5% beat earnings and 78.1% surpassed revenue estimates. With 92 S&P 500 members lined up to release their quarterly results this week, we are decidedly bullish on the equity market, which is gradually demonstrating a sequential improvement.

Medical, one of the 16 Zacks sectors, is expected to fare impressively. For the fourth quarter, the expected earnings growth rate for the sector is 6.6% on 5.7% revenue growth. Let us take a look at the major factors that are likely to influence the earnings results of Medical Product companies within the broader Medical universe.

Factors Influencing MedTech in Q4

Tax Benefits

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As part of the tax overhaul, corporate tax rates have been slashed to 21% from 35%, providing a huge relief for all sectors. Needless to say, the medical device companies cheered the legislation as well.

Further, the news of Congress delaying the 2.3% medical-device tax for another two years was a huge boost for industry players and investors. Manufacturers appreciate the delay as it is likely to favor the companies’ R&D activities.

Favorable Consumer Behavior

Despite political issues in the healthcare space, the change in consumer demand and market dynamics led to a dramatic transformation in the entire U.S. healthcare system over the last couple of years. This is evident from the growing prevalence of minimally-invasive surgeries, rising demand for liquid biopsy tests, use of IT for ensuring quick and improved patient care along with the shift of the payment system to a value-based model.

Let’s take a look at four major Medical Product stocks slated to release their quarterly reports on Feb 6:

Becton, Dickinson and Company BDX

Becton, Dickinson is scheduled to report first-quarter fiscal 2018 results before the opening bell.

Notably, the Zacks Consensus Estimate for first-quarter revenues is pegged at $3.05 billion, up 4.2% year over year. The Zacks Consensus Estimate for first-quarter earnings is $2.40, up 3% on a year-over-year basis.

The quarter is expected to show sluggishness in BD Medical — one of the major revenue components. While this can majorly dampen earnings in the first quarter, an expected improvement in revenues in other segments will help the company generate solid results. The Zacks Consensus Estimate for BD Medical revenues is pegged at $2.03 billion. This indicates a decline of 3.9% from the year-ago quarter.

The company’s innovative product pipeline is a key catalyst. A plethora of regulatory approvals in the United States and international markets are expanding the company’s product portfolio. (Read More: What's in Store for Becton, Dickinson in Q1 Earnings?)

Our quantitative model does not indicate an earnings beat for Becton, Dickinson in this quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat estimates. Becton, Dickinson’s Earnings ESP is -0.63%. The stock carries a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Becton, Dickinson and Company Price and Consensus

 

Becton, Dickinson and Company Price and Consensus | Becton, Dickinson and Company Quote

 

AmerisourceBergen Corporation ABC)

AmerisourceBergen is scheduled to report first-quarter fiscal 2018 results before the market opens.

Notably, the Zacks Consensus Estimate for first-quarter revenues is pegged at $40.37 billion, up 5.8% year over year. The Zacks Consensus Estimate for first-quarter earnings is $1.35, down 0.7% on a year-over-year basis.

This quarter, AmerisourceBergen is expected to show steady growth in the pharmaceutical distribution segment, a significant contributor to revenues. The Zacks Consensus Estimate for the Pharmaceutical Distribution segment is at $38.74 billion for the quarter under review, up almost 5.9% from the year-ago quarter (read more: Is AmerisourceBergen Poised for a Beat in Q1 Earnings?).

Our proven model does not conclusively show earnings beat for AmerisourceBergen this quarter. AmerisourceBergen has an Earnings ESP of +1.40%. The stock carries a Zacks Rank #3.

AmerisourceBergen Corporation (Holding Co) Price, Consensus and EPS Surprise

 

AmerisourceBergen Corporation (Holding Co) Price, Consensus and EPS Surprise | AmerisourceBergen Corporation (Holding Co) Quote

 

Laboratory Corporation of America Holdings LH)

Laboratory Corporation of America Holdings, also known as LabCorp, is slated to report fourth-quarter 2017 results, before the market opens.

The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $2.71 billion, up 11.5% year over year. The Zacks Consensus Estimate for fourth-quarter earnings is $2.37, up 10.2% on a year-over-year basis.

After several quarters of dismal performance, Covance Drug Development witnessed revenue growth in the third quarter, courtesy of strong organic growth, favorable foreign currency translation and the Chiltern acquisition.

Chiltern has added high-complementary capabilities to LabCorp’s offerings, including scale expansion in Asia Pacific, wider reach in the fast-growing emerging and mid-tier biopharma customer segment and expertise in oncology drug development. All these factors are likely to drive LabCorp’s Covance Drug Development top line in the yet-to-be reported quarter. (Read More: Will Covance Drug Development Drive LabCorp (LH) Q4 Earnings?)

Our proven model does not predict earnings beat for the company this season, thanks to its Earnings ESP of -0.60% and Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Laboratory Corporation of America Holdings Price, Consensus and EPS Surprise

 

Laboratory Corporation of America Holdings Price, Consensus and EPS Surprise | Laboratory Corporation of America Holdings Quote

 

Cerner Corporation CERN)

Cerner is set to report fourth-quarter 2017 results, after the market closes.

The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $1.33 billion, up 5.5% year over year. The Zacks Consensus Estimate for fourth-quarter earnings is 61 cents per share, flat on a year-over-year basis.

The company is expected to show steady growth in System Sales — one of the major revenue components. While this is expected to drive fourth-quarter results, an expected improvement in revenues in other segments will help the company generate solid results. The Zacks Consensus Estimate for System Sales revenues is pegged at $357 million, up 10.2% from last quarter. With growth in Cerner’s licensed software and subscriptions, Cerner is expected to witness strong performance in the segment (read more: Will Higher System Sales Drive Cerner's Q4 Earnings?).

Our quantitative model does not predict earnings beat for Cerner in the fourth quarter. The stock has a Zacks Rank #2 and Earnings ESP of -0.79%.

Cerner Corporation Price, Consensus and EPS Surprise

 

Cerner Corporation Price, Consensus and EPS Surprise | Cerner Corporation Quote

 

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Cerner Corporation (CERN) : Free Stock Analysis Report
 
Becton, Dickinson and Company (BDX) : Free Stock Analysis Report
 
Laboratory Corporation of America Holdings (LH) : Free Stock Analysis Report
 
AmerisourceBergen Corporation (Holding Co) (ABC) : Free Stock Analysis Report
 
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