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Medical Device Stocks' Earnings Due on Feb 13: ECL, DVA & QDEL
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Several large-cap Medical Device players have already announced their fourth-quarter results. Among them, Revvity, McKesson, Baxter International, Cardinal Health and DexCom beat on quarterly earnings and sales. BD and Catalent delivered mixed results as they grappled with the ongoing macroeconomic issues. A similar trend is expected to be reflected in the results of other industry players.
Per the latest Earnings Trends, quarterly results of the Medical sector so far have declined year over year, owing to the ongoing macroeconomic headwinds in the form of worldwide geopolitical issues, inflationary pressure and unfavorable foreign exchange rates. Going by the broader Medical sector’s scorecard, 56.7% of the companies in the Medical sector, constituting 85.8% of the sector’s market capitalization, reported earnings till Feb 7. Of these, earnings declined 17.7% year over year on 7% higher revenues. Almost 79.4% of these companies beat on earnings and 85.3% topped revenues, which were already down because of the ongoing macroeconomic issues.
Overall, fourth-quarter earnings of the Medical sector are expected to have plunged 18.2% on 6.3% revenue growth. In the third quarter, earnings declined 16.7% on revenue growth of 6.6%.
Factors Likely to Influence Medical Device Stocks’ Results
Like the rest of the market, Medical Device or the Zacks-defined Medical Products companies might have seen a big drop in their business growth in the fourth quarter, owing to the economic troubles in and outside the United States. The forecast is also indicative of a lower operating margin.
The industry continues to be troubled by worsening international trade, high inflation, and rising costs of raw materials, labor, medical care and shipping. Most of the companies in this sector faced higher costs and other pressures in the fourth-quarter months. Also, the labor-supply constraints and the global supply-chain problems might have moderated the growth process.
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 testing products.
Medical Device Stocks to Watch
Ecolab: Revenue uptick was observed in the third quarter of 2023 in the Global Industrial category, which includes the Water, Food & Beverage, Paper, and Downstream units. Water and food and beverage sales have been growing over the past three months, according to the company's third-quarter earnings call in October. Volume has helped the company’s customers generate more and better products while using less water, according to management. Customers can cut costs by using less water, which also reduces energy usage and carbon footprint. Ecolab's revenues in the fourth quarter are likely to have increased due to the above-mentioned tailwinds.
However, the company’s Paper business is likely to reflect customers’ reducing inventories on the back of disruptions that they had over the past few years.
The Zacks Consensus Estimate for Ecolab’s fourth-quarter 2023 revenues is pegged at $3.96 billion, indicating an improvement of 7.8% from the year-ago reported figure. The Zacks Consensus Estimate for fourth-quarter earnings of $1.54 per share indicates a 21.3% increase from the year-ago quarter’s level.
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 on earnings. This is not the case, as you can see below.
ECL has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
DaVita: On the third-quarter 2023 earnings call in November 2023, DaVita’s management confirmed that it witnessed a sustained decline in mortality, which was in line with its expectations. Management assumed this trend to have continued and resulted in positive volume growth in 2024. This looks promising for DaVita in the fourth quarter of 2023, as we expect the trend to have driven up its revenues.
On the same call, the company also confirmed witnessing a continued decrease in patient care costs during the quarter, driven primarily by the conversion of MIRCERA for anemia management. We expect the conversion to have continued in the fourth quarter as well, thereby leading to a further decline in patient care costs. This is likely to have positively impacted DaVita’s margin performance.
The Zacks Consensus Estimate for DaVita’ fourth-quarter 2023 revenues is pegged at $3 billion, indicating an increase of 2.9% from the year-ago reported figure. The Zacks Consensus Estimate for fourth-quarter EPS of $1.53 indicates a 37.8% improvement from the year-ago reported figure.
DVA has an Earnings ESP of 0.00% and a Zacks Rank #2 at present.
QuidelOrtho: The company is well-poised for growth in the fourth quarter, courtesy of its strong product portfolio. The optimism, led by a solid third-quarter 2023 performance and its continued spending on research and development (R&D), is expected to contribute further. The continued uptick in Sofia instruments and growth in QuidelOrtho’s integrated installed base and automation are likely to have continued in the fourth quarter. However, headwinds due to data security threats and overdependence on diagnostic tests persist. The margins are likely to have been under pressure in the soon-to-be reported quarter.
The Zacks Consensus Estimate for QuidelOrtho’s fourth-quarter 2023 revenues is pegged at $798.2 million, implying a decline of 7.9% from the year-ago reported figure. The Zacks Consensus Estimate for fourth-quarter earnings of $2.02 per share indicates a 14.8% increase from the year-ago quarter’s reported actuals.
QDEL has an Earnings ESP of 0.00% and a Zacks Rank #3 at present.
Image: Bigstock
Medical Device Stocks' Earnings Due on Feb 13: ECL, DVA & QDEL
Several large-cap Medical Device players have already announced their fourth-quarter results. Among them, Revvity, McKesson, Baxter International, Cardinal Health and DexCom beat on quarterly earnings and sales. BD and Catalent delivered mixed results as they grappled with the ongoing macroeconomic issues. A similar trend is expected to be reflected in the results of other industry players.
Some major industry players like Ecolab (ECL - Free Report) , DaVita (DVA - Free Report) & QuidelOrtho (QDEL - Free Report) are set to report their results tomorrow.
Q4 Preview and Scorecard
Per the latest Earnings Trends, quarterly results of the Medical sector so far have declined year over year, owing to the ongoing macroeconomic headwinds in the form of worldwide geopolitical issues, inflationary pressure and unfavorable foreign exchange rates. Going by the broader Medical sector’s scorecard, 56.7% of the companies in the Medical sector, constituting 85.8% of the sector’s market capitalization, reported earnings till Feb 7. Of these, earnings declined 17.7% year over year on 7% higher revenues. Almost 79.4% of these companies beat on earnings and 85.3% topped revenues, which were already down because of the ongoing macroeconomic issues.
Overall, fourth-quarter earnings of the Medical sector are expected to have plunged 18.2% on 6.3% revenue growth. In the third quarter, earnings declined 16.7% on revenue growth of 6.6%.
Factors Likely to Influence Medical Device Stocks’ Results
Like the rest of the market, Medical Device or the Zacks-defined Medical Products companies might have seen a big drop in their business growth in the fourth quarter, owing to the economic troubles in and outside the United States. The forecast is also indicative of a lower operating margin.
The industry continues to be troubled by worsening international trade, high inflation, and rising costs of raw materials, labor, medical care and shipping. Most of the companies in this sector faced higher costs and other pressures in the fourth-quarter months. Also, the labor-supply constraints and the global supply-chain problems might have moderated the growth process.
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 testing products.
Medical Device Stocks to Watch
Ecolab: Revenue uptick was observed in the third quarter of 2023 in the Global Industrial category, which includes the Water, Food & Beverage, Paper, and Downstream units. Water and food and beverage sales have been growing over the past three months, according to the company's third-quarter earnings call in October. Volume has helped the company’s customers generate more and better products while using less water, according to management. Customers can cut costs by using less water, which also reduces energy usage and carbon footprint. Ecolab's revenues in the fourth quarter are likely to have increased due to the above-mentioned tailwinds.
However, the company’s Paper business is likely to reflect customers’ reducing inventories on the back of disruptions that they had over the past few years.
The Zacks Consensus Estimate for Ecolab’s fourth-quarter 2023 revenues is pegged at $3.96 billion, indicating an improvement of 7.8% from the year-ago reported figure. The Zacks Consensus Estimate for fourth-quarter earnings of $1.54 per share indicates a 21.3% increase from the year-ago quarter’s level.
(Read more: Ecolab to Report Q4 Earnings: What's in the Cards?)
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 on earnings. This is not the case, as you can see below.
ECL has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Ecolab Inc. Price and EPS Surprise
Ecolab Inc. price-eps-surprise | Ecolab Inc. Quote
DaVita: On the third-quarter 2023 earnings call in November 2023, DaVita’s management confirmed that it witnessed a sustained decline in mortality, which was in line with its expectations. Management assumed this trend to have continued and resulted in positive volume growth in 2024. This looks promising for DaVita in the fourth quarter of 2023, as we expect the trend to have driven up its revenues.
On the same call, the company also confirmed witnessing a continued decrease in patient care costs during the quarter, driven primarily by the conversion of MIRCERA for anemia management. We expect the conversion to have continued in the fourth quarter as well, thereby leading to a further decline in patient care costs. This is likely to have positively impacted DaVita’s margin performance.
(Read more: DaVita to Report Q4 Earnings: What's in the Offing?)
The Zacks Consensus Estimate for DaVita’ fourth-quarter 2023 revenues is pegged at $3 billion, indicating an increase of 2.9% from the year-ago reported figure. The Zacks Consensus Estimate for fourth-quarter EPS of $1.53 indicates a 37.8% improvement from the year-ago reported figure.
DVA has an Earnings ESP of 0.00% and a Zacks Rank #2 at present.
DaVita Inc. Price and EPS Surprise
DaVita Inc. price-eps-surprise | DaVita Inc. Quote
QuidelOrtho: The company is well-poised for growth in the fourth quarter, courtesy of its strong product portfolio. The optimism, led by a solid third-quarter 2023 performance and its continued spending on research and development (R&D), is expected to contribute further. The continued uptick in Sofia instruments and growth in QuidelOrtho’s integrated installed base and automation are likely to have continued in the fourth quarter. However, headwinds due to data security threats and overdependence on diagnostic tests persist. The margins are likely to have been under pressure in the soon-to-be reported quarter.
The Zacks Consensus Estimate for QuidelOrtho’s fourth-quarter 2023 revenues is pegged at $798.2 million, implying a decline of 7.9% from the year-ago reported figure. The Zacks Consensus Estimate for fourth-quarter earnings of $2.02 per share indicates a 14.8% increase from the year-ago quarter’s reported actuals.
QDEL has an Earnings ESP of 0.00% and a Zacks Rank #3 at present.
QuidelOrtho Corporation Price and EPS Surprise
QuidelOrtho Corporation price-eps-surprise | QuidelOrtho Corporation Quote