Medical Products Q3 Earnings on Oct 28: BSX, CERN & More
Looking at the earnings picture so far, it is quite clear that the Medical sector (one of the 16 broad Zacks sectors within the Zacks Industry classification) has once again shown better resilience compared to many others amid the coronavirus-led economic rout. In fact, in contrast to the second-quarter of 2020 (which had bore the brunt of the pandemic devastation), the third quarter has reported clearer signs of recovery.
Medical is one of the six among the 16 major Zacks sectors to have reported year-over-year revenue growth and one of the nine to have reported year-over-year earnings growth so far this reporting cycle. Going by the latest Earnings Preview, this sector’s scorecard so far reflects 5.4% earnings growth on 5.1% upside in revenues. Overall, earnings are projected to grow 5.1% (Q2 reported growth was 4.7%) on 9.1% revenue growth (growth of 2.7% in Q2).
Integral to the broader Medical sector, Medical Products companies’ collective business growth is likely to have improved from the last reported quarter with month-wise rebound in base sales volumes on gradual lifting of restrictions in many states and regions. In the third quarter, these companies have been observed to appropriately invest in virtual physician education, remote clinical support and digital sales enablement suitable for healthcare support amid the pandemic. Besides, the testing, vaccine and therapeutic makers are riding on huge market adoption of their COVID-19-related healthcare-support products and services.
Already, many of these companies have come up with bullish earnings reports so far this reporting cycle.
However, some of the companies, particularly those with a huge international base witnessed a notable reduction in product demand across their core business segments and geographies in Q3 as well.
The Zacks Medical Product sector currently carries a Zacks Sector Rank in the bottom 33% (169 of 253 industries).
Let’s take a look at four Medical Product market leaders scheduled to announce results on Oct 28.
Boston Scientific BSX: With gradual relaxation of country-wise lockdown restrictions and following the recovery in international trade through the months of the third quarter, the company’s international business is expected to have registered higher growth compared with the second quarter. Inthe third quarter, Boston Scientific received approval for multiple product launches across major markets, including WATCHMAN FLX. We believe to see this month wise recovery trend in sales when the company reports.
The Zacks Consensus Estimate for the third quarter is pegged at earnings per share of 25 cents. Revenues are expected to be $2.52 million.
Boston Scientific does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — which increases the odds of an earnings beat. It has an Earnings ESP of -5.72% and a Zacks Rank #3.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Boston Scientific Corporation Price and EPS Surprise
Cerner Corporation CERN: Improvement in revenues across Subscriptions and Managed services segments is likely to get reflected in Cerner’s third-quarter results. Per the second-quarter 2020 earnings call, the third-quarter revenue guidance indicates a slightly larger impact of the pandemic than Cerner’s original expectations. It also accounts for the pending sale of the remainder of its RevWorks services business (anticipated to have been closed in the third quarter), which is projected to lower revenues by around $10 million in the third quarter.
Cerner has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%.
(Read more: Cerner to Report Q3 Earnings: What's in the Offing?)
Cerner Corporation Price and EPS Surprise
Livongo Health LVGO: Livongo Health third-quarter results are likely to reflect growth in core Livongo for Diabetes solution. Substantial contributions from hypertension, weight management and behavioral health offerings might have acted as catalysts in the quarter to be reported.
Further, continued strong demand in the company’s pipeline, rise in member enrollment and new client signings may have contributed to the third-quarter performance.
Livongo Health has a Zacks Rank #3 and an Earnings ESP of -100.00%.
(Read more: Livongo Health to Post Q3 Earnings: What's in Store?)
Livongo Health, Inc. Price and EPS Surprise
Penumbra, Inc. PEN: The company vascular business is expected to have suffered a decline in the third quarter on poor performances of both thrombectomy and embolization businesses, negatively impacted by COVID-19 in the first half of quarter. The Global Neuro business too is expected to report a sluggish performance on poor sales of Penumbra system for ischemic stroke impacted by distributor order timing.
Penumbra has a Zacks Rank #5 (Strong Sell) and an Earnings ESP of 0.00%.
Penumbra, Inc. Price and EPS Surprise
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