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Medical Product Stocks' Earnings on Apr 27: ZBH, RMD & More

Per our latest Earnings Preview , the earnings season has so far seen a bullish run. Till Apr 21, 95 S&P 500 members (24.9% of the total market cap) declared their quarterly numbers with the majority yet to report. Total earnings for these members have gone up 14.3% on 4.6% higher revenues.

Though the overall growth is steadily accelerating from the past few quarters, the investors are concerned about the healthcare space. This sector has struggled a lot during the past three months, thanks to the political power change and the ongoing policy restructuring related battle.

Whether Trump finally amends its earlier proposed American Health Care Act (AHCA) or totally repeals and replaces Obamacare, uncertainty within the medical space is high. According to a Health Payers Intelligence article, the House is back in session on Apr 25. A further visibility on the whole matter may be obtained following this.

However, this lack of visibility fails to affect the bullish trend the Medical sector (one of the 16 broader Zacks sectors) has been witnessing over the past few quarters. So far in the quarter, 22.6% of the members from this sector made their quarterly earnings releases with earnings and revenue beat standing at very impressive levels of 72.6% and 51.6%, respectively. With more and more companies lining up for their earnings announcement, the aggregate growth pace of this sector is expected to pick up further steam.

What's in Store for the Medical Product Space?

Medical - Products , an important part of the medical device subcategory within the broader Medical sector, holds a lot of promise at this moment. In fact, supporters for the Republican alternative argue that if the proposed amendment of AHCA is implemented, more people would be covered as a portion of the cost would be borne by the government. Needless to mention, this may lead to the broadening of customer base for the MedTech companies, which could have otherwise suffered.

Let's take a look at the major Medical products stocks slated to release their Jan-Mar 2017 quarter's reports on Apr 27:

Zimmer Biomet Holdings, Inc.ZBH : We expect Zimmer Biomet, a stalwart from our Medical Product subsector, to beat expectations when it reports first-quarter 2017 results. Last quarter, the company's earnings exceeded the Zacks Consensus Estimate by 1.42%. Also, it reported an average beat of 2.03% for the trailing four quarters.

We note that, Zimmer Biomet is successfully executing its goal of making strategic investments to further broaden and diversify its musculoskeletal portfolio. Lately, the company introduced more than 50 new clinical technology solutions and services.

Our proven model shows that Zimmer Biomet is likely to beat earnings because it has the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is the case here. Zimmer Biomet currently carries a Zacks Rank #3 and has an Earnings ESP of +1.42%. We note that, while a favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise, a bullish Zacks Rank increases the predictive power of the ESP. (Read More: Will Zimmer Biomet Beat Earnings Estimates in Q1? )

You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zimmer Biomet Holdings, Inc. Price and EPS Surprise

Zimmer Biomet Holdings, Inc. Price and EPS Surprise | Zimmer Biomet Holdings, Inc. Quote

ResMed Inc.RMD : This renowned worldwide provider of generators, masks, and related accessories for the treatment of sleep-disordered breathing (SDB)registered poor performance in masks segment due to headwinds arising in e EMEA and APAC regions for quite some time now. Even though the AirFit F20 and AirFit N20 masks have been introduced in these regions, management expects the underperformance to continue in the third quarter of fiscal 2017 as well.

On the bright side, ResMed continues to enjoy high demand for its SDB products. Recently, the company unveiled positive data related to its adaptive servo-ventilation (ASV) therapy's ability to treat patients with sleep apnea. The company's current endeavors to gain traction in the SDB market are expected to boost revenues.

However, our proven model does not conclusively show that ResMed is likely to beat earnings this quarter as along with a Zacks Rank #4 (Sell), it has an Earnings ESP of 0.00%. (Read More: ResMed Q3 Earnings: Disappointment in the Cards? )

ResMed Inc. Price and EPS Surprise

ResMed Inc. Price and EPS Surprise | ResMed Inc. Quote

Align Technology Inc.ALGN : Based in California, this medical product company manufactures and markets a system of clear aligner therapy, intra-oral scanners and CAD/CAM (computer-aided design and computer-aided manufacturing) digital services used in dentistry, orthodontics, and dental records storage. Align's recent product development, balanced growth observed across all channels and its consistent focus in international markets to drive growth bolster our confidence in the stock.

We expect Align to beat expectations when it reports first-quarter fiscal 2017 results, after the market closes . This is because it has the right combination of the aforementioned two key ingredients. The company currently has an Earnings ESP of +4.48% and carries a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

(Read More: Align Technology Q1 Earnings: A Beat in the Cards? )

Align Technology, Inc. Price and EPS Surprise

Align Technology, Inc. Price and EPS Surprise | Align Technology, Inc. Quote

West Pharmaceutical Services, Inc.WST : Headquartered in Exton, PA, this is a leading manufacturer of packaging components and delivery systems for injectable drugs and healthcare products. The company currently has businesses across North and South America, Europe, Asia and Australia.

West Pharmaceutical is scheduled to report its first-quarter 2017 numbers. Our proven model does not conclusively show that West Pharmaceutical is likely to beat earnings this quarter. This is because West Pharmaceutical currently has a Zacks Rank #4 and an Earnings ESP of -1.82%.

West Pharmaceutical Services, Inc. Price and EPS Surprise

West Pharmaceutical Services, Inc. Price and EPS Surprise | West Pharmaceutical Services, Inc. Quote

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Zimmer Biomet Holdings, Inc. (ZBH): Free Stock Analysis Report

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West Pharmaceutical Services, Inc. (WST): 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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