We expect CR Bard Inc. (BCR) to beat earnings when the company reports its fourth quarter and full year 2014 financial numbers on Jan 29, 2015.
Last quarter, the company’s earnings had surpassed the Zacks Consensus Estimate by 2.4%. Moreover, CR Bard has outpaced our estimates in three of the past four quarters, with an average earnings beat of 2.6%. Let’s see how things are shaping up for this announcement.
What is Driving the Better-than-Expected Earnings?
The company reported an impressive third-quarter 2014, wherein both revenues and earnings comfortably beat the respective Zacks Consensus Estimate.
In the fourth quarter of 2014, the FDA cleared the company’s Lutonix DCB for percutaneous transluminal angioplasty (PTA), making it the first and only FDA-approved Drug-Coated Balloon (DCB) catheter in the U.S. Sales of this product in Europe is successfully driving top-line growth for the company.
CR Bard’s initiative to introduce its products in the emerging markets is increasingly delivering accretive returns, as validated by the company’s strong performance in the international markets. CR Bard is also investing heavily in certain countries in Europe, Asia and Latin America.
We tend to believe that the settlement of the Gore litigation lawsuit in the company’s favor is a material upside for CR Bard. Benefits from the proceeds will allow the company to invest in strategic mergers and acquisitions, develop new products, and leverage shareholder returns as well. The Gore royalty payment of $38 million contributed nearly 500 basis points of growth in the last reported quarter.
Why a Likely Positive Surprise?
Our proven model shows that CR Bard is likely to beat earnings because it has the perfect combination of two key ingredients.
Zacks ESP: CR Bard’s Earnings ESP stands at +0.45%. This is because the company’s Most Accurate estimate stands at $2.25, whereas the Zacks Consensus Estimate is pegged a tad lower at $2.24. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: CR Bard currently has a Zacks Rank #3 (Hold). Note that stocks with Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The combination of CR Bard’s Zacks Rank #3 and +0.45% ESP makes us reasonably confident of an earnings beat at the company.
Other Stocks to Consider
Here are some other stocks you may want to consider, as our model shows these have the right combination of elements to post an earnings beat this quarter:
Intersect ENT (XENT) has an earnings ESP of +11.11% and carries a Zacks Rank #2 (Buy).
Hologic (HOLX) has an earnings ESP of +2.78% and carries a Zacks Rank #2.
AbbVie (ABBV) has an earnings ESP of +1.18% and carries a Zacks Rank #2.
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