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Medical Product Stocks' Q4 Earnings Due on Jan 30: SYK & More
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Several large-cap Medical Product industry players have already announced fourth-quarter results. Of these, Intuitive Surgical, Elevance Health and ResMed’s earnings and sales beat their respective estimates. Abbot beat on revenue estimates while earnings were in line. Revenues and earnings improved for each of these companies from the prior-year period level on the back of recovering supply-chain issues and improving pricing. However, these players delivered mixed quarterly results with recovery in certain categories on a year-over-year basis. A similar trend is expected to be reflected in the results of other industry players.
Per the latest Earnings Trends report, quarterly results of the Medical sector so far have improved year over year despite the ongoing macroeconomic headwinds in the form of worldwide geopolitical issues, inflationary pressure and unfavorable foreign exchange. Going by the broader Medical sector’s scorecard, 8.3% of the companies, constituting 25.9% of the sector’s market capitalization, reported earnings till Jan 24. Of these, 100% beat on earnings and 60% beat on revenues. Earnings improved 7.9% year over year on 3.3% higher revenues.
However, the overall fourth-quarter earnings of the Medical sector are expected to plunge 22.2% on 4.2% revenue growth. This compares with the third-quarter earnings decline of 16.7% on revenue growth of 6.6%.
Factors That Influenced MedTech Stocks
The Zacks-defined Medical Products companies might have faced a big negative impact from the ongoing economic challenges in and outside the United States during the fourth quarter. The U.S. dollar rose against several foreign currencies in the fourth-quarter months. This must have made currency issues worse for Medical Product companies that do international trade.
The profit margin of many stocks might have suffered from high unit costs and logistical problems, according to the industry-wide trend. The economic difficulties must have also reduced capital investments in the fourth quarter, impacting the sector's performance. The companies are accelerating their cost-reduction initiatives to cope with the rising costs.
Consumer preferences changed sharply due to the tight monetary policy. This, in turn, reduced the demand for non-essential MedTech products. This must have lowered the companies' revenues in the fourth quarter on a sequential basis.
On a positive note, the companies might have seen a strong recovery in their traditional businesses and testing demand in the fourth quarter. AI and robotics for the medical Internet of Things, which became popular during the pandemic, remained in demand.
Medical Products Stocks to Watch
Let's take a look at three Medical product companies that are scheduled to report fourth-quarter 2023 earnings on Jan 30, and find out how things might have shaped up prior to the announcements.
Stryker: Robust sales growth in the MedSurg and Neurotechnology segment on the back of robust performance of subsegments is likely to have continued in the fourth quarter. Heightened demand is expected to have contributed to the Orthopaedics & Spine segment's performance in the soon-to-be-reported quarter. Strong customer demand for its existing as well as new products is an added advantage. However, ongoing hospital staffing pressure and foreign currency movements are likely to have hurt its sales growth.
The Zacks Consensus Estimate for Stryker’s fourth-quarter 2023 revenues is pegged at $5.6 billion, indicating an increase of 7.7% from the year-ago reported figure. The Zacks Consensus Estimate for EPS of $3.27 indicates a 9% improvement from the year-ago reported figure.
Per our proven model, a stock with the combination of a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of posting an earnings beat.
SYK currently has an Earnings ESP of 0.00% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Cencora: Sustained strong growth in specialty product sales, coupled with broad-based solid performance and utilization trends across the portfolio in the U.S. Healthcare Solutions segment, might have favored COR’s fiscal first-quarter performance. High demand for the recently approved GLP-1 drugs for diabetes and/or weight loss is likely to have boosted growth. Moreover, the new distribution center in California will continue to support its scale of supply.
The International Healthcare Solutions segment’s World Courier unit is expected to have exhibited a solid performance in the quarter under review. The addition of PharmaLex in 2023 is also likely to have brought additional revenues.
The Zacks Consensus Estimate for Cencora’s first-quarter 2024 revenues is pegged at $68.81 billion, implying an improvement of 9.5% from the year-ago reported figure. The Zacks Consensus Estimate for first-quarter earnings is pinned at $2.85 per share, indicating an improvement of 5.2% year over year.
COR has an Earnings ESP of 0.00% and a Zacks Rank #2 at present.
Accuray: The company’s products have been registering robust customer adoption over the past few months. On its first-quarter fiscal 2024 earnings call in November, management confirmed that the company witnessed continued customer adoption of CyberKnife, Radixact and TomoTherapy platforms. Accuray also expanded its installed base of customers within the quarter to 1,040 systems, indicating 5% year-over-year growth. Per management, new order growth was also solid, which outpaced product revenue shipments. The trend is likely to have continued in the second quarter of fiscal 2024.
However, a volatile macroeconomic environment raises uncertainty. Inflationary pressure, coupled with costs to support launch of new products, is likely to have fueled operating expenses during the soon-to-be-reported quarter, thereby hurting margins.
The Zacks Consensus Estimate for Accuray’s second-quarter fiscal 2024 revenues is pegged at $107.1 million, indicating a decline of 6.7% from the year-ago reported figure. The Zacks Consensus Estimate for second-quarter earnings is pinned at a loss of 7 cents per share, indicating a year-over-year decline of 250%.
ARAY has an Earnings ESP of 0.00% and a Zacks Rank #3 at present.
Image: Bigstock
Medical Product Stocks' Q4 Earnings Due on Jan 30: SYK & More
Several large-cap Medical Product industry players have already announced fourth-quarter results. Of these, Intuitive Surgical, Elevance Health and ResMed’s earnings and sales beat their respective estimates. Abbot beat on revenue estimates while earnings were in line. Revenues and earnings improved for each of these companies from the prior-year period level on the back of recovering supply-chain issues and improving pricing. However, these players delivered mixed quarterly results with recovery in certain categories on a year-over-year basis. A similar trend is expected to be reflected in the results of other industry players.
Some major industry players like Stryker (SYK - Free Report) , Cencora, Inc. (COR - Free Report) and Accuray (ARAY - Free Report) are set to report their results tomorrow.
Q4 Preview and Scorecard
Per the latest Earnings Trends report, quarterly results of the Medical sector so far have improved year over year despite the ongoing macroeconomic headwinds in the form of worldwide geopolitical issues, inflationary pressure and unfavorable foreign exchange. Going by the broader Medical sector’s scorecard, 8.3% of the companies, constituting 25.9% of the sector’s market capitalization, reported earnings till Jan 24. Of these, 100% beat on earnings and 60% beat on revenues. Earnings improved 7.9% year over year on 3.3% higher revenues.
However, the overall fourth-quarter earnings of the Medical sector are expected to plunge 22.2% on 4.2% revenue growth. This compares with the third-quarter earnings decline of 16.7% on revenue growth of 6.6%.
Factors That Influenced MedTech Stocks
The Zacks-defined Medical Products companies might have faced a big negative impact from the ongoing economic challenges in and outside the United States during the fourth quarter. The U.S. dollar rose against several foreign currencies in the fourth-quarter months. This must have made currency issues worse for Medical Product companies that do international trade.
The profit margin of many stocks might have suffered from high unit costs and logistical problems, according to the industry-wide trend. The economic difficulties must have also reduced capital investments in the fourth quarter, impacting the sector's performance. The companies are accelerating their cost-reduction initiatives to cope with the rising costs.
Consumer preferences changed sharply due to the tight monetary policy. This, in turn, reduced the demand for non-essential MedTech products. This must have lowered the companies' revenues in the fourth quarter on a sequential basis.
On a positive note, the companies might have seen a strong recovery in their traditional businesses and testing demand in the fourth quarter. AI and robotics for the medical Internet of Things, which became popular during the pandemic, remained in demand.
Medical Products Stocks to Watch
Let's take a look at three Medical product companies that are scheduled to report fourth-quarter 2023 earnings on Jan 30, and find out how things might have shaped up prior to the announcements.
Stryker: Robust sales growth in the MedSurg and Neurotechnology segment on the back of robust performance of subsegments is likely to have continued in the fourth quarter. Heightened demand is expected to have contributed to the Orthopaedics & Spine segment's performance in the soon-to-be-reported quarter. Strong customer demand for its existing as well as new products is an added advantage. However, ongoing hospital staffing pressure and foreign currency movements are likely to have hurt its sales growth.
(Read more: Stryker to Report Q4 Earnings: What’s in the Cards?)
The Zacks Consensus Estimate for Stryker’s fourth-quarter 2023 revenues is pegged at $5.6 billion, indicating an increase of 7.7% from the year-ago reported figure. The Zacks Consensus Estimate for EPS of $3.27 indicates a 9% improvement from the year-ago reported figure.
Per our proven model, a stock with the combination of a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of posting an earnings beat.
SYK currently has an Earnings ESP of 0.00% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stryker Corporation Price and EPS Surprise
Stryker Corporation price-eps-surprise | Stryker Corporation Quote
Cencora: Sustained strong growth in specialty product sales, coupled with broad-based solid performance and utilization trends across the portfolio in the U.S. Healthcare Solutions segment, might have favored COR’s fiscal first-quarter performance. High demand for the recently approved GLP-1 drugs for diabetes and/or weight loss is likely to have boosted growth. Moreover, the new distribution center in California will continue to support its scale of supply.
The International Healthcare Solutions segment’s World Courier unit is expected to have exhibited a solid performance in the quarter under review. The addition of PharmaLex in 2023 is also likely to have brought additional revenues.
(Read more: Cencora to Report Q1 Earnings: What's in the Cards?)
The Zacks Consensus Estimate for Cencora’s first-quarter 2024 revenues is pegged at $68.81 billion, implying an improvement of 9.5% from the year-ago reported figure. The Zacks Consensus Estimate for first-quarter earnings is pinned at $2.85 per share, indicating an improvement of 5.2% year over year.
COR has an Earnings ESP of 0.00% and a Zacks Rank #2 at present.
Cencora, Inc. Price and EPS Surprise
Cencora, Inc. price-eps-surprise | Cencora, Inc. Quote
Accuray: The company’s products have been registering robust customer adoption over the past few months. On its first-quarter fiscal 2024 earnings call in November, management confirmed that the company witnessed continued customer adoption of CyberKnife, Radixact and TomoTherapy platforms. Accuray also expanded its installed base of customers within the quarter to 1,040 systems, indicating 5% year-over-year growth. Per management, new order growth was also solid, which outpaced product revenue shipments. The trend is likely to have continued in the second quarter of fiscal 2024.
However, a volatile macroeconomic environment raises uncertainty. Inflationary pressure, coupled with costs to support launch of new products, is likely to have fueled operating expenses during the soon-to-be-reported quarter, thereby hurting margins.
The Zacks Consensus Estimate for Accuray’s second-quarter fiscal 2024 revenues is pegged at $107.1 million, indicating a decline of 6.7% from the year-ago reported figure. The Zacks Consensus Estimate for second-quarter earnings is pinned at a loss of 7 cents per share, indicating a year-over-year decline of 250%.
ARAY has an Earnings ESP of 0.00% and a Zacks Rank #3 at present.
Accuray Incorporated Price and EPS Surprise
Accuray Incorporated price-eps-surprise | Accuray Incorporated Quote
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