) is set to report its first-quarter 2013 results after the
market closes on Wednesday, Apr 24. Let's see how things are
shaping up prior to the announcement.
COVIDIEN PLC (COV): Free Stock Analysis
COVENTRY HLTHCR (CVH): Free Stock Analysis
HAEMONETICS CP (HAE): Free Stock Analysis
STRYKER CORP (SYK): Free Stock Analysis
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In the last quarter, the orthopedic devices major posted a 0.88%
positive earnings surprise. Higher domestic sales and cost
containment measures were largely offset by weak international
and capital equipment sales.
Factors to Consider this Quarter
Stryker, with a market-cap of $24.41 billion, is one of the
largest medical device manufacturers operating in the global
orthopedic market. Its well-diversified product portfolio,
expanding foothold in emerging markets along with acquisitions
are expected to drive future growth. The performance of the core
Reconstructive business, which has showed signs of a turnaround
recently, is vital for the company.
However, we are concerned about the impact of the warning letter
from the U.S. Food and Drug Administration ("FDA") to Stryker's
Instruments division as well as other product recalls, which are
plaguing the company. Additionally, other challenges such as soft
international sales, particularly in Europe, and tough hospital
capital budgets pose major headwinds.
Our proven model does not conclusively show that Stryker is
likely to beat earnings estimates this quarter. That is because a
stock needs to have both a positive Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) as well as a Zacks Rank of #1, 2 or 3 for this to happen. This
is not the case here as you will see below.
Zacks Earnings ESP
: The Most Accurate Estimate stands at $1.00, while the
Zacks Consensus Estimate is pegged at $1.01. This comes to a
difference of -0.99%.
Zacks Rank #3 (Hold)
: Stryker's Zacks Rank #3 (Hold) lowers the predictive power of
ESP. The Zacks Rank #3 together with -0.99% earnings ESP makes
surprise prediction difficult.
Moreover, we caution against stocks with Zacks Ranks of #4 and #5
(Sell rated stocks) before going into the earnings announcement,
especially when the company is experiencing negative estimate
Other Stocks to Consider
Here are some other companies you may want to consider as our
model shows they have the right ingredients to post an earnings
beat this quarter:
Coventry Health Care Inc.
), Earnings ESP of +3.80% and a Zacks Rank #2 (Buy)
), Earnings ESP of +2.17% and a Zacks Rank #3 (Hold)
), Earnings ESP of +0.91% and a Zacks Rank #3 (Hold)