The fourth-quarter earnings season has commenced on a positive note for most sectors, with a decent picture from the 133 S&P 500 participants that have reported till Jan 26. Total earnings for these companies are up 12.3% year over year on 8.8% higher revenues, with 81.2% beating earnings estimates and 78.9% surpassing top-line expectations.
Notably, about 121 S&P 500 companies are reporting their earnings this week.
Per the latest Earnings Preview, overall earnings for the fourth quarter are expected to increase 11.6% on 7.5% growth in revenues. This indicates an improved growth projection from the previous quarter driven by a corporate-tax overhaul and relatively healthy job data. These factors have boosted corporate earnings and stoked investments.
Based on this pattern, the fourth quarter is expected to register modest double-digit percentage earnings growth on a year-over-year basis.
MedTech Earnings So Far
Medical, one among the 16 Zacks sectors, is expected to stand out this quarter. The sector benefits from favorable consumer behavior, growing prevalence of minimally-invasive surgeries, 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.
This is evident from the results of MedTech heavyweights Abbott ABT and Intuitive Surgical ISRG. The companies exited the fourth quarter on a solid note, beating the Zacks Consensus Estimate on both counts. An upbeat FY18 guidance also instills confidence.
For the fourth quarter, the earnings growth rate for the medical sector is pegged at 4.2% on 4.9% revenue growth.
Upcoming Releases
Let’s take a look at three major other MedTech stocks slated to release their quarterly reports on Jan 30, 2018:
Stryker Corporation’s SYK results are scheduled for release after the market closes. Notably, the Zacks Consensus Estimate for fourth-quarter revenues is pegged at $3.46 billion, up 9.5% year over year. The Zacks Consensus Estimate for fourth-quarter earnings is $1.95, up 9.6% on a year-over-year basis.
Stryker recently announced better-than-expected preliminary net sales results for fourth-quarter 2017. For full-year 2017, net sales are estimated at $12.4 billion, up 9.8% from the year-ago quarter on a constant-currency basis. The figure beat the Zacks Consensus Estimate of $12.38 billion.
Buoyed by these prospects, our quantitative model indicates an earnings beat for Stryker this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates. Stryker’s Earnings ESP is +0.01%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. Stryker carries a Zacks Rank #3 (read more: Will Core Segmental Growth Aid Stryker in Q4 Earnings?).
Stryker Corporation Price and Consensus
Zimmer Biomet Holdings, Inc ZBH) is set to report results, before the market opens. Notably, the Zacks Consensus Estimate for fourth-quarter revenues is pegged at $2.03 billion, up 0.9% year over year. The Zacks Consensus Estimate for fourth-quarter earnings is projected at $2.10, down 1.9% on a year-over-year basis.
Despite solid prospects in the company’s S.E.T. (Surgical, Sports Medicine, Foot and Ankle, Extremities and Trauma) arm, macroeconomic uncertainties and unfavorable currency fluctuations have been denting sales over the past few quarters.
The company has been dealing with pricing pressure. In this regard, Zimmer Biomet witnessed negative pricing pressure of approximately 2.1% last quarter. In the absence of any favorable changes on these lines, these headwinds might reflect in the company’s fourth-quarter results (read more: Will S.E.T. Arm Drive Zimmer Biomet's Q4 Earnings?).
As a result, our proven model does not conclusively show earnings beat for Zimmer Biomet this quarter. Zimmer Biomet has an Earnings ESP of +0.38%. The stock carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) Stocks Here.
Zimmer Biomet Holdings, Inc. Price and Consensus
Align Technology, Inc ALGN) is set to report results after the market closes. Notably, the Zacks Consensus Estimate for fourth-quarter revenues is pegged at $395.5 million, up 34.9% year over year. The Zacks Consensus Estimate for fourth-quarter earnings is at 96 cents, up 43.3% on a year-over-year basis.
Align Technology achieved a milestone of five million patients undergoing treatment with its flagship clear aligner system — InvisAlign — in November 2017. The company has been adopting several strategies to drive adoption of its core InvisAlign product line.
In 2017, the company received two U.S. patents for Align Technology’s SmartTrack aligner material that is exclusively used for InvisAlign aligner treatment. Moreover, in a bid to gain traction in the InvisAlign platform, Align Technology collaborated with Digital Smile Design in the recent past (read more: Can Invisalign Drive Align Technology's Q4 Earnings?).
Despite the positive developments, our proven model does not conclusively show that Align Technology is likely to beat earnings this quarter. Align Technology has an Earnings ESP of -2.08%. The stock carries a Zacks Rank #2.
Align Technology, Inc. Price and Consensus
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2018 today >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment