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MedTech Stocks' Earnings to Watch on Feb 2: BDX, DGX & CNMD

This earnings season so far has reflected a continued recovery in sales for companies within the Medical sector. Earnings have increased year over year, albeit at a slower pace than revenues. Inflationary headwinds, supply chain challenges and labor shortages, however, continued for the sector, hurting the bottom line amid recovering demand for medical products and services. Per the latest Earnings Preview, 8.9% of the companies in the Medical sector, comprising 28.4% of the sector’s market capitalization, reported earnings till Jan 25. Of these, 80% beat earnings estimates, while 20% surpassed revenue estimates. Earnings increased 5% year over year on 7% higher revenues.

This scorecard highlights the Medical sector’s continued resilience amid an uncertain macroeconomic environment. Throughout the fourth quarter, the companies saw rising demand for surgery-related procedures. However, most players in the industry were reeling under continued inflationary pressure across the world. Mounting raw material costs, labor-supply constraints and supply-chain disruptions hampered the entire production and distribution process. Meanwhile, an increase in the prices of products and services is likely to have aided the Medical sector.

Overall, fourth-quarter earnings of the Medical sector are expected to decline 10.9%, while sales are expected to increase 2.9%. This compares with the third-quarter reported earnings decline of 3.3% and revenue growth of 5.1%.

Medical Device Quarterly Synopsys

Integral to the broader Medical sector, Medical Device companies’ collective business growth is likely to have recorded an improvement compared with the last year, with a significant reduction in COVID-led fatality across the United States and other developed countries. Added to this, notable Medical Device players have been undertaking consistent efforts to mitigate staffing shortages that have disrupted business growth since the pandemic’s beginning. These factors are likely to have been advantageous for the base businesses of Medical Device stocks.

Yet, Medical Device companies continue to be burdened by the global shortage of semiconductors chips that produce life-saving medical equipment like pacemakers, blood-pressure monitors, insulin pumps and defibrillators. This ongoing challenge is expected to have significantly hampered performance across several businesses in the Medical Device industry in Q4.

Overall, the rebound in the base business through the months of the fourth quarter is expected to have been impressive. Medical Device companies like Becton Dickinson and Company BDX, Quest Diagnostics Incorporated DGX and CONMED Corporation CNMD are likely to have shown improvement in revenues, while margins are likely to have been hurt.

Let’s take a look at the MedTech players scheduled to announce results on Feb 2.

Becton Dickinson: Becton Dickinson’s Life Science segment has been registering strong growth across both Integrated Diagnostic Solutions and Biosciences business units, despite supply constraints. This is likely to have significantly driven up segmental revenues. BD Research Cloud and CerTest VIASURE Monkeypox molecular research use-only assay are likely to have aided top-line growth during the quarter. However, the continued decline in COVID-only testing revenues is likely to have weighed on BD’s Life Sciences segmental revenues in the first quarter of fiscal 2023. Strong growth in Peripheral Intervention sales, and Urology and Critical Care revenues are likely to have aided BD Interventional segment revenues. (Read more: BD Gears Up for Q1 Earnings: What's in the Offing?)

Per our proven model, a stock with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates.

BDX is likely to beat earnings estimate in the upcoming release as it has an Earnings ESP of +0.26% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Becton, Dickinson and Company Price and EPS Surprise

Becton, Dickinson and Company Price and EPS Surprise
Becton, Dickinson and Company Price and EPS Surprise

Becton, Dickinson and Company price-eps-surprise | Becton, Dickinson and Company Quote

Quest Diagnostics: Quest Diagnostics is likely to have benefited from the continued sales rebound in the non-COVID base business as economic activities returned to pre-pandemic levels during the fourth quarter. However, the base business is likely to have been impacted by Hurricane Ian and continued inflationary headwinds. The company has been strengthening its advanced diagnostics capabilities and pursuing its operational excellence strategy to fight inflationary headwinds. Quest Diagnostics’ COVID-19 testing revenues are expected to have declined year over year. (Read more: Quest Diagnostics to Report Q4 Earnings: What's in Store?)

DGX has an Earnings ESP of 0.00% and a Zacks Rank #2.

Quest Diagnostics Incorporated Price and EPS Surprise

Quest Diagnostics Incorporated Price and EPS Surprise
Quest Diagnostics Incorporated Price and EPS Surprise

Quest Diagnostics Incorporated price-eps-surprise | Quest Diagnostics Incorporated Quote

CONMED: CONMED's fourth-quarter 2022 top line is likely to have been aided by continued demand for its products across all segments. Orthopedics revenues are likely to have gained during the quarter on the back of robust demand in the United States as well as ex-U.S. markets. Recovery in General surgery is likely to have continued helped by rising demand for procedures.

CNMD has an Earnings ESP of 0.00% and a Zacks Rank of 3.

CONMED Corporation Price and EPS Surprise

CONMED Corporation Price and EPS Surprise
CONMED Corporation Price and EPS Surprise

CONMED Corporation price-eps-surprise | CONMED Corporation Quote

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