Markets

C.R. Bard (BCR) Set to Outshine Earnings Estimates in Q3

We expect C.R. BardBCR to beat the Zacks Consensus Estimate when it reports third-quarter 2015 results on Oct 22.

Why a Likely Positive Surprise?

Our proven model shows that C.R. Bard is likely to beat earnings because it has the right combination of two key ingredients.

Zacks ESP : C.R. Bard's Earnings ESP stands at +0.45%. This is because the company's Most Accurate estimate stands at $2.25, whereas the Zacks Consensus Estimate is pegged at $2.24. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive surprise.

Zacks Rank : C.R. Bard currently has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

The combination of C.R. Bard's Zacks Rank #3 and +0.45% ESP makes us reasonably confident of an earnings beat.

What is Driving the Better-than-Expected Earnings?

We believe that growing adoption of Lutonix drug coated-balloon (DCB) will continue to be the key growth catalyst for C. R. Bard. Lutonix DCB, an angioplasty balloon coated with a therapeutic dose of the drug paclitaxel, is used to treat patients suffering from peripheral arterial disease (PAD).

Improving reimbursement rates also bode well for the product. At the beginning of the second quarter, the U.S. Centers for Medicare and Medicaid Services (CMS) raised reimbursement for the device for outpatient use. In early August, CMS approved a new technology add-on payment for the Lutonix DCB under the Medicare hospital inpatient prospective payment system.

We believe the reimbursement rate improvement for both outpatient and inpatient use will pave way for faster and extensive adoption of Lutonix DCB. Moreover, we feel the improved pass-through payments will ease the stiff pricing environment created by government-related healthcare reforms, to a certain extent.

On the flip side, a strong U.S. dollar is expected to impact sales in the near term. Stiff competition and sluggish hospital spending environment also prevail as major headwinds. Moreover, the vaginal mesh lawsuit that the company reportedly settled (per Bloomberg at least 3000 cases for $200 million) in August will continue to dent liquidity, in our view.

Other Stocks to Consider

Here are some other companies you may consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

NuVasive, Inc. NUVA , earnings ESP of +7.41% and a Zacks Rank #1.

Masimo Corp MASI , earnings ESP of +3.23% and a Zacks Rank #1.

Hologic Inc. HOLX , earnings ESP of +2.38% and a Zacks Rank #2.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days . Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

BARD C R INC (BCR): Free Stock Analysis Report

HOLOGIC INC (HOLX): Free Stock Analysis Report

MASIMO CORP (MASI): Free Stock Analysis Report

NUVASIVE INC (NUVA): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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.

In This Story

NUVAMASIHOLX

Other Topics

Earnings Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More