3 Medical Product Stocks Set to Beat This Earnings Season

The current reporting cycle is expected to see Medical Product industry players put up a solid performance riding on a host of favorable factors.

The past few months have been remarkably fulfilling for the global medical device space in terms of research and development (R&D) and regulatory progress. The Global Surgical Robotics market demonstrated strong development on evolving market trends with players like Medtronic, Intuitive Surgical ISRG and Stryker at the forefront. During the first quarter, the next generation of surgical robots was installed in a number of operating rooms globally.

According to Market Trends News, enormous growth opportunities through 2019 will drive a change within Surgical Robotics space. This should reflect in the first-quarter performance of the constituent companies.

3D printing also marks a significant advancement in the recent times. Big players have come up with a number of patient-specific implants on CT and MRI scans, which target reduction of surgery costs.

Strong performance of Medical Product companies in emerging economies, especially in the Asia/Pacific and Western Europe markets, is likely to fuel first-quarter results. These companies are likely to benefit from customer base expansion, relaxed regulations, cheap skilled labor, increasing wealth and government focus on healthcare infrastructure.

This apart, the new cohort of advanced genomic therapy has taken personalized medicines to an entirely new level. With increasing emergence of life-threatening ailments across the globe, analysis of genetic variation and function has become crucial for the medical care market, thus broadening the scope for companies like Illumina ILMN, Myriad Genetics MYGN or Genomic Health GHDX.

Key Regulatory Update of Q1

According to an article by MedTech Intelligence, on Feb 1, 2019, the FDA issued the Safety and Performance Based Pathway Guidance document, representing a considerable change for the medical device industry. This document shifts substantial equivalency from testing of predicate devices to well established and robust performance testing criteria and methodologies.

Medical Device Tax Repeal

The reintroduction of the controversial 2.3% medical device tax’ repeal by the Senate has boosted optimism. Per last week’s update, “the proposal to strike the tax down also has the support of the White House, which last year put out a Statement of Administrative Policy calling for its removal….” (a MedTech Dive report).

The Weak Spot

While long-term growth prospects are quite encouraging, the trade tiff between the United States and China remains a major concern. It is expected to dampen medical product companies’ first-quarter performance.

Zacks Methodology

Given the existence of numerous players in the Medical-Product industry, finding the right stocks with the potential to beat estimates might be quite a daunting task.

However, our proprietary Zacks methodology, makes this routine fairly simple for investors.

One can narrow down the choices by focusing specifically on medical products stocks (under the Medical-Device subcategory) that have the desirable combination of a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Our research shows that for stocks with this combination, chances of a positive earnings surprise are significantly as high as 70%.

Earnings ESP is our proven methodology to determine stocks with maximum chances to deliver an earnings surprise. This key element provides the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.

Here we present three stocks poised to beat on earnings this reporting cycle.

Our Picks

Perrigo Company plc PRGO: Perrigo’s constant focus on pursuing additional branded OTC opportunities in the United States is impressive. Moreover, the ongoing restructuring initiatives and an operating expense discipline are expected to support its bottom line. Perrigo’s decision to separate its Rx segment is encouraging as it faces a challenging pricing environment for generics, which is hurting sales.

Perrigo Company plc Price and EPS Surprise