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How to Boost Your Portfolio with Top Medical Stocks Set to Beat Earnings

Zacks Equity Research
·2 min read

Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.

The earnings figure itself is key, but a beat or miss on the bottom line can sometimes be just as, if not more, important. Therefore, investors should consider paying close attention to these earnings surprises, as a big beat can help a stock climb even higher.

2 Stocks to Add to Your Watchlist

The Zacks Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information. With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure.

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The final step today is to look at a stock that meets our ESP qualifications. AVEO Pharmaceuticals (AVEO) earns a Zacks Rank #2 11 days from its next quarterly earnings release on November 14, 2022, and its Most Accurate Estimate comes in at -$0.15 a share.

AVEO has an Earnings ESP figure of 8.16%, which, as explained above, is calculated by taking the percentage difference between the -$0.15 Most Accurate Estimate and the Zacks Consensus Estimate of -$0.16.

AVEO is part of a big group of Medical stocks that boast a positive ESP, and investors may want to take a look at Humana (HUM) as well.

Slated to report earnings on February 1, 2023, Humana holds a #2 (Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $2.07 a share 90 days from its next quarterly update.

The Zacks Consensus Estimate for Humana is $2.02, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 2.28%.

AVEO and HUM's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.

Find Stocks to Buy or Sell Before They're Reported

Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>


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
 
AVEO Pharmaceuticals, Inc. (AVEO) : Free Stock Analysis Report
 
Humana Inc. (HUM) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research