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Can These 3 Medical Device Stocks Hit Earnings This Season?
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The second-quarter 2024 earnings season has just begun for the Medical sector (one of the 16 broad Zacks sectors within the Zacks Industry classification), with several MedTech players ready to release their quarterly results. Per the latest Earnings Preview, the Medical sector is one of the 10 sectors whose net margins in the second quarter are expected to improve from the year-ago level, the fourth consecutive quarter of margin gains. This is likely to result from strong product revenues on growing demand across all industries, offsetting the shortcomings caused by worldwide geopolitical issues and healthcare labor shortages.
The latest Earnings Preview indicates that 16.9% of the companies in the Medical sector, constituting nearly 33.8% of the sector’s market capitalization, reported earnings until Jul 24. Of these, 100% beat earnings and revenue estimates. Earnings increased 4.2% year over year on the back of 2.6% higher revenues.
Overall, second-quarter earnings of the Medical sector are expected to improve 19.4% on the back of a 7.3% sales increase. This compares with first-quarter earnings decline of 24% despite 6.8% reported revenue growth. Per the latest trends, the Medical sector is one of the nine sectors whose second-quarter 2024 earnings are expected to be above the year-earlier level.
Medical Device Quarterly Synopsis
Integral to the broader Medical sector, the Medical Device or Zacks-defined Medical Products companies’ collective business growth is likely to have stabilized despite the ongoing macroeconomic headwinds in the United States as well as internationally. With the pandemic-related crisis gone, the industry is experiencing a rise in care visits, thereby driving demand for therapies and other healthcare services.
Meanwhile, the rapid adoption of generative Artificial Intelligence (genAI) and digital therapies is helping more efficient and patient-friendly services. Rising innovation and investment in this space are being driven by an aging population, growing healthcare awareness and increasing access to better health options. Market experts believe these trends will be a major driving force behind the current earnings season.
However, the industry is facing challenges due to the worsening geopolitical environment. This situation is exacerbated by worldwide supply-chain bottlenecks that result in high costs of labor and raw materials, as well as freight and a shortage of healthcare workers. Additionally, diagnostic testing companies have been witnessing a continued year-over-year decline in testing demand for COVID-19 testing products.
Overall, the April-June months were marked by strength in product portfolios and solid customer adoption of products. Medical Device companies like Ecolab Inc. (ECL - Free Report) , Stryker Corporation (SYK - Free Report) and Fresenius Medical Care AG (FMS - Free Report) are likely to have been positively impacted by these tailwinds despite encountering turbulence on the macroeconomic front.
Let’s observe the status of five MedTech players who are scheduled to announce results on Jul 30.
Ecolab: Ecolab’s second-quarter 2024 results might have been favored by recovery on both the quick-serve restaurants and the food retail side. The quarterly performance is also likely to have been complemented by sustained strong demand for Pest Elimination (a component of Ecolab’s broader Other segment) in commercial businesses. (Read more: Factors Setting the Tone for Ecolab's Q2 Earnings)
The Zacks Consensus Estimate for second-quarter 2024 earnings per share (EPS) is pegged at $1.66. Revenues are expected to be $4.03 billion.
Ecolab does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — which increases the odds of an earnings beat. ECL has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Stryker: Stryker’s second-quarter 2024 revenues are likely to have been driven by sustained strength in its MedSurg and Neurotechnology segment, which witnessed substantial sales growth on the back of the robust performance of subsegments in the past two quarters. Stryker is committed to the sustained expansion of Mako, reflecting robust demand for this differentiated robotic technology. This heightened demand, along with rising installations, is likely to have contributed to the Orthopaedics & Spine segment's performance in the soon-to-be-reported quarter. Moreover, an improved hospital budget is likely to have kept the order book strong. (Read more: Stryker to Report Q2 Earnings: What's in the Cards?)
The Zacks Consensus Estimate for second-quarter EPS is pegged at $2.79. Revenues are expected to be $5.41 billion.
SYK has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Fresenius Medical Care: Fresenius Medical Care’s second-quarter 2024 revenues are likely to have been aided by continued strength in its kidney care business. The company is on track to execute its portfolio optimization plan to exit non-core and dilutive assets. As announced during the first quarter, FMS entered into agreements to divest its dialysis clinic networks in Brazil, Colombia, Chile and Ecuador. After further signing the divestments of its dialysis clinic networks in Guatemala, Peru and Curacao, Fresenius Medical Care has signed or closed the exit from all of its dialysis clinics operations in Latin America. The company also closed the divestment of its dialysis clinic network in Turkiye and the Cura Day Hospitals Group, Australia, in April. These portfolio optimization measures are likely to have weighed on the company in the to-be-reported quarter.
The Zacks Consensus Estimate for second-quarter 2024 EPS is pegged at 38 cents. Revenues are expected to be $5.28 billion.
Fresenius Medical Care AG & Co. KGaA Price and EPS Surprise
Image: Bigstock
Can These 3 Medical Device Stocks Hit Earnings This Season?
The second-quarter 2024 earnings season has just begun for the Medical sector (one of the 16 broad Zacks sectors within the Zacks Industry classification), with several MedTech players ready to release their quarterly results. Per the latest Earnings Preview, the Medical sector is one of the 10 sectors whose net margins in the second quarter are expected to improve from the year-ago level, the fourth consecutive quarter of margin gains. This is likely to result from strong product revenues on growing demand across all industries, offsetting the shortcomings caused by worldwide geopolitical issues and healthcare labor shortages.
The latest Earnings Preview indicates that 16.9% of the companies in the Medical sector, constituting nearly 33.8% of the sector’s market capitalization, reported earnings until Jul 24. Of these, 100% beat earnings and revenue estimates. Earnings increased 4.2% year over year on the back of 2.6% higher revenues.
Overall, second-quarter earnings of the Medical sector are expected to improve 19.4% on the back of a 7.3% sales increase. This compares with first-quarter earnings decline of 24% despite 6.8% reported revenue growth. Per the latest trends, the Medical sector is one of the nine sectors whose second-quarter 2024 earnings are expected to be above the year-earlier level.
Medical Device Quarterly Synopsis
Integral to the broader Medical sector, the Medical Device or Zacks-defined Medical Products companies’ collective business growth is likely to have stabilized despite the ongoing macroeconomic headwinds in the United States as well as internationally. With the pandemic-related crisis gone, the industry is experiencing a rise in care visits, thereby driving demand for therapies and other healthcare services.
Meanwhile, the rapid adoption of generative Artificial Intelligence (genAI) and digital therapies is helping more efficient and patient-friendly services. Rising innovation and investment in this space are being driven by an aging population, growing healthcare awareness and increasing access to better health options. Market experts believe these trends will be a major driving force behind the current earnings season.
However, the industry is facing challenges due to the worsening geopolitical environment. This situation is exacerbated by worldwide supply-chain bottlenecks that result in high costs of labor and raw materials, as well as freight and a shortage of healthcare workers. Additionally, diagnostic testing companies have been witnessing a continued year-over-year decline in testing demand for COVID-19 testing products.
Overall, the April-June months were marked by strength in product portfolios and solid customer adoption of products. Medical Device companies like Ecolab Inc. (ECL - Free Report) , Stryker Corporation (SYK - Free Report) and Fresenius Medical Care AG (FMS - Free Report) are likely to have been positively impacted by these tailwinds despite encountering turbulence on the macroeconomic front.
Let’s observe the status of five MedTech players who are scheduled to announce results on Jul 30.
Ecolab: Ecolab’s second-quarter 2024 results might have been favored by recovery on both the quick-serve restaurants and the food retail side. The quarterly performance is also likely to have been complemented by sustained strong demand for Pest Elimination (a component of Ecolab’s broader Other segment) in commercial businesses. (Read more: Factors Setting the Tone for Ecolab's Q2 Earnings)
The Zacks Consensus Estimate for second-quarter 2024 earnings per share (EPS) is pegged at $1.66. Revenues are expected to be $4.03 billion.
Ecolab Inc. Price and EPS Surprise
Ecolab Inc. price-eps-surprise | Ecolab Inc. Quote
Ecolab does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — which increases the odds of an earnings beat. ECL has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Stryker: Stryker’s second-quarter 2024 revenues are likely to have been driven by sustained strength in its MedSurg and Neurotechnology segment, which witnessed substantial sales growth on the back of the robust performance of subsegments in the past two quarters. Stryker is committed to the sustained expansion of Mako, reflecting robust demand for this differentiated robotic technology. This heightened demand, along with rising installations, is likely to have contributed to the Orthopaedics & Spine segment's performance in the soon-to-be-reported quarter. Moreover, an improved hospital budget is likely to have kept the order book strong. (Read more: Stryker to Report Q2 Earnings: What's in the Cards?)
The Zacks Consensus Estimate for second-quarter EPS is pegged at $2.79. Revenues are expected to be $5.41 billion.
Stryker Corporation Price and EPS Surprise
Stryker Corporation price-eps-surprise | Stryker Corporation Quote
SYK has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Fresenius Medical Care: Fresenius Medical Care’s second-quarter 2024 revenues are likely to have been aided by continued strength in its kidney care business. The company is on track to execute its portfolio optimization plan to exit non-core and dilutive assets. As announced during the first quarter, FMS entered into agreements to divest its dialysis clinic networks in Brazil, Colombia, Chile and Ecuador. After further signing the divestments of its dialysis clinic networks in Guatemala, Peru and Curacao, Fresenius Medical Care has signed or closed the exit from all of its dialysis clinics operations in Latin America. The company also closed the divestment of its dialysis clinic network in Turkiye and the Cura Day Hospitals Group, Australia, in April. These portfolio optimization measures are likely to have weighed on the company in the to-be-reported quarter.
The Zacks Consensus Estimate for second-quarter 2024 EPS is pegged at 38 cents. Revenues are expected to be $5.28 billion.
Fresenius Medical Care AG & Co. KGaA Price and EPS Surprise
Fresenius Medical Care AG & Co. KGaA price-eps-surprise | Fresenius Medical Care AG & Co. KGaA Quote
FMS has an Earnings ESP of 0.00% and a Zacks Rank #3.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.