C.R. Bard Inc. BCR is set to report first-quarter 2015 earnings results on Apr 23. Last quarter, Bard reported earnings of $2.29 per share, which beat the Zacks Consensus Estimate by 2.2% (5 cents). Let’s see how things are shaping up for this quarter.
Factors at Play
We believe that Lutonix drug coated-balloon (DCB) will be the key growth catalyst for Bard in the first quarter. The Lutonix DCB is an angioplasty balloon which is coated with a therapeutic dose of the drug paclitaxel, used to treat patients with peripheral arterial disease (PAD).
The device was cleared by the FDA in Oct 2014, making it the first and only FDA-approved DCB in the U.S. The early market acceptance of the device has been impressive and in our opinion the company will witness an expanded adoption of this technology as the market continues to mature.
During the quarter, the U.S. Centers for Medicare and Medicaid Services (CMS) approved a pass-through payment for the Lutonix DCB. We believe that this development will ease the stiff pricing environment, in turn boosting the adoption of the device. Additionally, the limited distribution agreement with Boston Scientific BSX is expected to drive the device’s sales going forward.
Moreover, Bard’s expansive product portfolio is a key growth factor. The company’s initiative to introduce its products in the emerging markets is increasingly delivering accretive returns. However, stiff competition and sluggish hospital spending environment are the primary headwinds.
Earnings Whispers?
Our proven model does not conclusively show that Bard is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Bard currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $2.07.
Zacks Rank: Bard has a Zacks Rank #3 (Hold) which increases the predictive power of ESP; but when combined with a 0.00% ESP, it makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revision momentum.
Stocks to Consider
Here are a few stocks worth considering that, per our model, have the right combination of elements to post an earnings beat this quarter:
athenahealth ATHN with an Earnings ESP of +45.45% and a Zacks Rank #1 (Strong Buy).
Biogen BIIB with an Earnings ESP of +0.51% and a Zacks Rank #1.
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