We expect major healthcare company,
) to beat expectations when it reports second-quarter fiscal 2013
results on Apr 26.
Why a Likely Positive Surprise?
Our proven model shows that Covidien is likely to beat earnings
because it has the right combination of two key ingredients.
Positive Zacks ESP
: Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
), which represents the difference between the Most Accurate
Estimate and the Zacks Consensus Estimate, is at +0.91%. This is
a very meaningful and leading indicator of a likely positive
earnings surprise for shares.
Zacks Rank #3 (Hold)
: Covidien has a Zacks Rank #3 (Hold). Note that stocks with
Zacks Ranks of #1, #2 and #3 have a significantly higher chance
of beating earnings. The sell rated stocks (#4 and #5) should
never be considered going into an earnings announcement.
The combination of Covidien's Zacks Rank #3 (Hold) and +0.91% ESP
makes us very confident in looking for a positive earnings beat
on Apr 26.
What is Driving the Better Than Expected
A host of factors such as solid top-line growth on the back of
acquisitions (focused on emerging markets) and new offerings
along with a share repurchase program are expected to lead to a
positive earnings surprise in the upcoming quarter.
The positive trend is seen in the trailing four-quarter average
surprise of 2.16%, which was greatly helped by the 3.77% surprise
in the last-reported quarter. This was mainly due to an efficient
management team capable of delivering solid results despite a
difficult Medtech space.
Other Stocks to Consider
Here are some other companies that may be considered as our model
shows they have the right ingredients to post an earnings beat
Coventry Health Care Inc.
), Earnings ESP of +3.80% and a Zacks Rank #2 (Buy)
), Earnings ESP of +8.00% and Zacks Rank #3 (Hold)
), Earnings ESP of +2.17% and a Zacks Rank #3 (Hold)
COVIDIEN PLC (COV): Free Stock Analysis
COVENTRY HLTHCR (CVH): Free Stock Analysis
HAEMONETICS CP (HAE): Free Stock Analysis
HANGER ORTHOPED (HGR): Free Stock Analysis
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