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Can Mylan (MYL) Surprise Investors This Earnings Season?

MylanMYL is scheduled to report third-quarter 2015 earnings results on Oct 30, before the opening bell.

The company has recorded positive earnings surprises in three of the trailing four quarters with an average beat of 1.83%. Let's see how things are shaping up for this announcement.

Factors Driving Q3 Results

For the third quarter of 2015, the company expects earnings in the range of $1.39 to $1.45 per share. Mylan's Generics segment has been performing well over the last few quarters and is expected to continue its run in this quarter as well. Mylan has seen quite a few generic launches over the past few quarters and this quarter was no exception. The newly launched products should perform well, driving segmental growth.

The company has been in the news lately for its efforts to acquire Perrigo Company PRGO . Mylan believes that the transaction will be accretive to adjusted earnings on a fully synergized basis. The company expects to realize annual pre-tax operational synergies of at least $800 million by the end of four years after the completion of the deal. Mylan has been quite active on the deal signing and acquisition front over the past few quarters.

Mylan expects 2015 earnings per share in the range of $4.15 to $4.35. We may see an update on the guidance based on the third-quarter performance.

What Our Model Indicates

Our proven model does not conclusively show that Mylan is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to likely post an earnings beat. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.37.

Zacks Rank: Mylan currently carries a Zacks Rank #3 (Hold). Although the company's Zacks Rank #3 enhances the predictive power of the ESP, the company's ESP of 0.00% makes a surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks that Warrant a Look

Here are a few health care stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.

Merrimack Pharmaceuticals, Inc. MACK has an Earnings ESP of +2.44% and carries a Zacks Rank #3. It is expected to release results on Nov 9.

Keryx Biopharmaceuticals Inc. KERX has an Earnings ESP of +3.85% and carries a Zacks Rank #3. The company is expected to release results on Oct 29.

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MYLAN NV (MYL): Free Stock Analysis Report

PERRIGO CO PLC (PRGO): Free Stock Analysis Report

MERRIMACK PHAR (MACK): Free Stock Analysis Report

KERYX BIOPHARMA (KERX): 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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