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Anthem (ANTM) Q4 Earnings: A Beat in Store for the Stock?

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We expect Anthem Inc.ANTM to beat expectations when it reports fourth-quarter results on Feb 1 before the market opens.

Why a Likely Positive Surprise?

Our proven model shows that Anthem has the right combination of the two key ingredients to beat estimates. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to be able to beat earnings and Anthem has the right mix.

Zacks ESP: Anthem has an Earnings ESP of +6.29%. This is because the Most Accurate estimate is pegged at $1.69, while the Zacks Consensus Estimate stands at $1.59. This is a meaningful indicator of a likely positive earnings surprise for the company.

Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: Anthem currently carries a Zacks Rank #3. The combination of Anthem's favorable Zacks Rank and positive ESP makes us confident of an earnings beat in the upcoming release.

Conversely, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.

Anthem, Inc. Price and EPS Surprise

Anthem, Inc. Price and EPS Surprise | Anthem, Inc. Quote

What's Driving the Better-than-Expected Earnings?

Anthem expects 2016 operating revenues of approximately $83.5 billion and adjusted earnings per share of around $10.80.

The company projects decent growth in enrollment. The company raised its expectations for fully insured membership to the range of 15 million to 15.1 million for 2016, while the self-funded membership projection remained unchanged at 24.7 million.

The company's margins will likely be benefitted by its MA (mergers & acquisitions) restructuring program, which was aimed at bolstering inorganic growth.

Part of the contracts worth $81 billion, which will be awarded through 2021 for its Medicaid business, received in the fourth quarter could have driven the company to invest in new and specialized services. This would in turn boost enrollment growth.

However, Anthem expects to witness higher medical costs for individual ACA-compliant products as was the case last quarter.

Stocks to Consider

Here are some companies from the Medical sector that you may want to consider as they have the right combination of elements to post an earnings beat this quarter:

Molina Healthcare Inc. MOH , which is expected to report fourth-quarter earnings results on Feb 15, has an Earnings ESP of +5.33% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank stocks here .

HCA Holdings, Inc. HCA has an Earnings ESP of +1.12% and a Zacks Rank #3. The company is expected to report fourth-quarter earnings results on Jan 31.

Davita Healthcare Partners, Inc DVA has an Earnings ESP of +4.40% and a Zacks Rank #3. The company is slated to report fourth-quarter earnings results on Feb 9.

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Molina Healthcare Inc (MOH): Free Stock Analysis Report

Anthem, Inc. (ANTM): Free Stock Analysis Report

HCA Holdings, Inc. (HCA): Free Stock Analysis Report

DaVita HealthCare Partners Inc. (DVA): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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