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How to Boost Your Portfolio with Top Medical Stocks Set to Beat Earnings

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Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.

The earnings figure itself is key, of course, but a beat or miss on the bottom line can sometimes be just as, if not more, important. Therefore, investors should consider paying close attention to these earnings surprises, as a big beat can help a stock climb and vice versa.

Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.

The Zacks Earnings ESP, Explained

The Zacks Earnings ESP is more formally known as the Expected Surprise Prediction, and it aims to grab the inside track on the latest analyst estimate revisions ahead of a company's report. The idea is relatively intuitive as a newer projection might be based on more complete information.

With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure. The system also utilizes our core Zacks Rank to provide a stronger system for identifying stocks that might beat their next quarterly earnings estimate and possibly see the stock price climb.

Bringing together a positive earnings ESP alongside a Zacks Rank #3 (Hold) or better has helped stocks report a positive earnings surprise 70% of the time. Furthermore, by using these parameters, investors have seen 28.3% annual returns on average, according to our 10 year backtest.

Most stocks, about 60%, fall into the #3 (Hold) category, and they are expected to perform in-line with the broader market. Stocks with a #2 (Buy) and #1 (Strong Buy) rating, or the top 15% and top 5% of stocks, respectively, should outperform the market, with Strong Buy stocks outperforming more than any other rank.

Should You Consider Novartis?

The final step today is to look at a stock that meets our ESP qualifications. Novartis (NVS - Free Report) earns a #3 (Hold) 29 days from its next quarterly earnings release on October 29, 2024, and its Most Accurate Estimate comes in at $1.96 a share.

NVS has an Earnings ESP figure of +2.19%, which, as explained above, is calculated by taking the percentage difference between the $1.96 Most Accurate Estimate and the Zacks Consensus Estimate of $1.92. Novartis is one of a large database of stocks with positive ESPs. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

NVS is just one of a large group of Medical stocks with a positive ESP figure. Abbott (ABT - Free Report) is another qualifying stock you may want to consider.

Slated to report earnings on October 16, 2024, Abbott holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $1.20 a share 16 days from its next quarterly update.

Abbott's Earnings ESP figure currently stands at +0.18% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.20.

NVS and ABT's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.

Find Stocks to Buy or Sell Before They're Reported

Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>


See More Zacks Research for These Tickers


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Abbott Laboratories (ABT) - free report >>

Novartis AG (NVS) - free report >>

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