With Q3 earnings reports already out from more than 66.4% of the S&P 500 members (332 companies), our latest Earnings Outlook has exhibited an improving trend so far. Proceeding deep into the second half of the earnings reporting cycle, we are further assured about this quarter turning out to be the first to witness earnings growth after five back-to-back quarters of earnings declines for the S&P 500 index.
Total earnings for these 332 companies are up 1.9% year over year on 1.3% higher revenues, with 72.9% beating EPS estimates and 55.4% exceeding top-line expectations. As per the report, Medical is one of the 12 broader sectors among the 16 Zacks sectors which have reported earnings growth so far. The sector has witnessed 12.3% earnings growth on the back of 8.7% higher revenues in the third quarter.
What’s in Store for the Med-Product Space?
Medical product, a niche area under the medical device subcategory within the broader Medical sector, holds a lot of promise at the moment thanks to the temporary two-year suspension of the controversial 2.3% medical device excise tax which took a toll on the entire MedTech industry since its enactment in 2013. In addition, the recent change in consumer demand and market dynamics led to a dramatic transformation in the entire healthcare system. 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, and the shift of the payment system to a value-based model among others.
Let’s take a look at the major Medical Product stocks slated to release their quarterly reports on Nov 3:
Hill-Rom Holdings, Inc. HRC
Headquartered in Batesville, IN, Hill-Rom is one of the leading global medical device companies. We are upbeat about the company remaining on a solid growth trajectory over the near term as post the completion of its $2.05 billion acquisition of Welch Allyn, Hill-Rom has a larger global reach with operations in 30 countries worldwide. Accordingly, the combined major has outlined rather impressive long-term growth strategies. The company is scheduled to report third-quarter 2016 numbers on Nov 3.
However, our proven model does not conclusively show that Hill-Rom is likely to beat earnings this quarter as along with a Zacks Rank #3 (Hold), it has an Earnings ESP of 0.00%. That is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.13. We note that while a favorable Zacks Rank #3 increases the predictive power of the ESP, a 0.00% makes surprise prediction difficult. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Agios Pharmaceuticals, Inc. AGIO
This medical product company works on the development of novel investigational medicines to treat cancer and rare genetic metabolic disorders through scientific leadership in the field of cellular metabolism. The company is scheduled to report third-quarter 2016 numbers on Nov 3. Agios currently has an Earnings ESP of 0.00% along with a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Note that stocks with a Zacks Rank #1, 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates. Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Penumbra, Inc. PEN
Penumbra is an active player in the fast-growing interventional therapies space. The company’s products primarily cater to the unmet clinical needs in neuro and peripheral vascular markets. Meanwhile, consistent growth in neuro franchise is driven by expansion in the ischemic stroke market as well as sales of Penumbra System which includes ACE, ACE64 and ACE68, introduced lately. Accordingly, Penumbra’s strategy to focus on impactful product development across a varied portfolio may boost investors’ confidence in the stock.
Penumbra currently has a Zacks Rank #3 and an Earnings ESP of 0.00%. That is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 11 cents. The company is scheduled to report third-quarter 2016 numbers on Nov 3. (Read More: Is a Beat in Store for Penumbra this Earnings Season?)
Insulet Corporation PODD
This medical product company is a popular name in the field of diabetes management. Insulet, through its Omnipod Insulin Management System, seeks to expand the use of insulin pump therapy among people with insulin-dependent diabetes. The company is scheduled to report third-quarter 2016 numbers on Nov 3.
Insulet is expected to release its third-quarter 2016 financial numbers on Nov 3. The company has a Zacks Rank #3 and an Earnings ESP of 0.00%. That is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 8 cents.
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