Yahoo Finance Will These 5 MedTech Stocks Beat Forecasts This Earnings Season?
We are in the middle of the first-quarter 2024 earnings season, with numerous MedTech bigwigs having already released first-quarter results. Per the latest Earnings Preview, quarterly results of the Medical sector are projected to decline year over year, affected by the ongoing macroeconomic headwinds, primarily in the form of worldwide geopolitical issues and healthcare labor shortages.
Going by the broader Medical sector’s scorecard, 16.7% of the companies in the Medical sector, constituting 32.6% of the sector’s market capitalization, reported earnings till Apr 24. Earnings improved 0.7% year over year on 3.6% higher revenues. All companies beat earnings, while 70% beat revenue estimates, which were already down because of the ongoing macroeconomic issues.
Overall, first-quarter earnings of the Medical sector are expected to decline 7.6% despite 6.3% revenue growth. This compares with the fourth-quarter earnings decline of 17.1% on revenue growth of 7%.
Some major industry players like Hologic HOLX, Zimmer Biomet ZBH, Illumina ILMN, Teleflex TFX and Bruker BRKR are set to report results tomorrow.
Factors Likely to Influence MedTech Stocks’ Results
Replicating the broader market trend, MedTech or the Zacks-defined Medical Products companies’ collective business growth in the first quarter is likely to have stabilized. With the pandemic-related crisis gone, the industry is experiencing rapid adoption of generative Artificial Intelligence (genAI) and digital therapies, which market observers predict will take the healthcare business by storm.
Macro trends that have been setting the stage for even more innovation and investment in this space are an aging population, growing healthcare awareness and increasing access to better health options. Favorable impacts from these are expected to be seen in the first-quarter results.
Yet, the industry is once again in a difficult position due to the worsening geopolitical environment, supply chain bottlenecks that result in high costs for labor and raw materials, as well as freight and a shortage of healthcare workers.
Also, diagnostic testing companies have been witnessing a severe year-over-year decline in testing demand, compared to strong demand in the year-ago period for COVID-19 testing products.
MedTech Stocks to Watch
Hologic: Its surgical business has undergone a transformation in recent years. The company emphasizes the relevance of internal innovation and product line expansion through M&A — a winning strategy across Hologic. MyoSure and the associated fluid system are projected to have made significant contributions to Hologic's GYN Surgical. The robust performance of the company's most recent NovaSure version, the NovaSure V5, in the second quarter of fiscal 2024 is likely to have helped. Despite the optimistic factors, Hologic’s Diagnostics business is expected to have been hampered by significantly lower COVID testing compared with the prior year’s level.
(Read more: How You Should Play Hologic Ahead of Q2 Earnings)
The Zacks Consensus Estimate for fiscal second-quarter total revenues is pegged at $1.00 billion, a 2.5% expected decline year over year.
The consensus mark for adjusted earnings stands at 97 cents per share, implying an 8.5% decline from the year-ago quarter’s reported figure.
During the fiscal second quarter, the company’s shares rose 9.1% compared with the industry’s 9.3% growth.
Per our proven model, a stock with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates. This is exactly the case, as you can see below.
HOLX has an Earnings ESP of +0.34% and carries a Zacks Rank of 3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Hologic, Inc. Price and EPS Surprise
Hologic, Inc. price-eps-surprise | Hologic, Inc. Quote
Zimmer Biomet: Like its industry competitors, Zimmer Biomet’s business too is currently entangled in several headwinds, including supply challenges, a tough labor market and the current geopolitical landscape. All these have been resulting in significant margin deceleration.
However, the company expects these headwinds to ease out, banking on its strong pipeline and the solid execution of its growth strategies. This is likely to be reflected in the first-quarter top-line results of the company. Overall, Zimmer Biomet is expected to have witnessed procedure volume improvement in its legacy business in the first quarter. Strong strategic execution and innovations are expected to have driven first-quarter revenues from the Knees and Hip businesses.
(Read more: What's in the Cards for Zimmer Biomet in Q1 Earnings?)
The Zacks Consensus Estimate for first-quarter total revenues is pegged at $1.87 billion, suggesting a 2.2% rise from the prior-year quarter’s reported figure. The consensus mark for earnings is pegged at $1.87 per share, indicating a 1.06% decline from the year-ago quarter’s reported figure.
During the first quarter, the stock increased 8.5% compared with the industry’s 7.1% growth.
ZBH has an Earnings ESP of +0.28% and carries Zacks Rank #3.
Zimmer Biomet Holdings, Inc. Price and EPS Surprise
Zimmer Biomet Holdings, Inc. price-eps-surprise | Zimmer Biomet Holdings, Inc. Quote
Illumina: The company is expected to have witnessed strong demand for its market-leading NGS oncology portfolio in first-quarter 2024. The company is expected to have gained from the recent launch of the TruSight Oncology 500 ctDNA version 2. Within Sequencing, the company might have once again reaped the benefit of continued market acceptance of the NovaSeq X series. However, GRAIL related legal complications might have once again dented profits significantly.
The Zacks Consensus Estimate for the company’s first-quarter 2024 total revenues is pegged at $1.05 billion, suggesting a 3% decline from the prior-year quarter’s reported figure. The consensus mark for earnings is pegged at 3 cents per share, indicating a 62.5% plunge from the year-ago quarter’s reported figure.
Meanwhile, during the first quarter, shares of the company dropped 1.4% against the industry’s 2% growth.
Illumina has an Earnings ESP of +50.00% and carries a Zacks Rank #3.
Illumina, Inc. Price and EPS Surprise
Illumina, Inc. price-eps-surprise | Illumina, Inc. Quote
Teleflex: In the hospital setting, Teleflex is expected to have witnessed consistent demand for UroLift in the first quarter of 2024. Outside the United States, UroLift’s recent commercialization in Japan might have led to a healthy revenue contribution from this region. Further, Teleflex is expected to have registered accelerated growth within its vascular product portfolio during the to-be-reported quarter.
The Zacks Consensus Estimate for first-quarter total revenues is pegged at $726.7 million, suggesting a 2.2% rise from the prior-year quarter’s reported figure. The consensus mark for earnings is pegged at $3.07 per share, indicating a 0.65% decline from the year-ago quarter’s reported figure.
During the first quarter, the stock declined 9.3% against the industry’s 9.4% growth.
TFX has an Earnings ESP of 0.00% and carries a Zacks Rank #3.
Teleflex Incorporated Price and EPS Surprise
Teleflex Incorporated price-eps-surprise | Teleflex Incorporated Quote
Bruker: In the first quarter of 2024, Bruker’s NANO’s microelectronics and semiconmetrology tools business is expected to have witnessed strong growth, banking on continued strong bookings and backlogs. As a group, revenues are expected to have been driven by the strength of end markets, including academic, government and industrial.
Added to this, Bruker’s CALID Group has been making decent progress lately, primarily because of the strong demand for differentiated instruments. The group is expected to have benefited from the sustained growth in the mass spectrometry business, including the FT-IR, Near IR and Raman molecular spectroscopy product lines. Bruker’s timsTOF platform continues its adoption in 4D proteomics, epiproteomics and multiomics.
The Zacks Consensus Estimate for first-quarter total revenues is pegged at $723.8 million, suggesting a 5.6% rise from the prior-year quarter’s reported figure. The consensus mark for earnings is pegged at 46 cents per share, indicating a 28.1% decline from the year-ago quarter’s reported figure.
During the first quarter, the stock increased 27.9% compared with the industry’s 14.6% growth.
BRKR has an Earnings ESP of -0.92% and carries a Zacks Rank #2.
Bruker Corporation Price and EPS Surprise
Bruker Corporation price-eps-surprise | Bruker Corporation Quote
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Illumina, Inc. (ILMN) : Free Stock Analysis Report
Hologic, Inc. (HOLX) : Free Stock Analysis Report
Teleflex Incorporated (TFX) : Free Stock Analysis Report
Bruker Corporation (BRKR) : Free Stock Analysis Report
Zimmer Biomet Holdings, Inc. (ZBH) : Free Stock Analysis Report
