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MARKETS LIVE BLOG:

STOCKS SLIDE AFTER META'S REALITY CHECK, DOWNBEAT GDP

Caterpillar sinks 7% after earnings, management sees weakness in Europe, Asia-Pacific

MedTech Stocks Earnings Slated on Feb 21: MDT, HSIC and More

Zacks Equity Research
Updated

The earnings season is taking its last lap with 411 S&P 500 members having already reported their numbers (88.4% of the index’s total market cap). According to our latest Earnings Preview report, the scorecard so far has portrayed a much better picture with the quarter emerging as the highest with respect to earnings growth over the past two years.  

Till Feb 17, total earnings for these members have gone up 8% on 4.9% higher revenues with 68.9% beating earnings estimates and 54.7% exceeding revenue expectations.

Per the report, Medical is one of the 13 broader sectors among the 16 Zacks sectors which have so far reported earnings growth. Among the 83.3% members of this sector who have made their quarterly releases, earnings and revenue beat are standing at impressive levels of 80% and 53.3%, respectively. The sector has delivered 4.8% earnings growth on the back of 5.3% higher revenues in the quarter.

What’s in Store for the Med-Product Space?

MedTech, an important part within the broader Medical sector, holds a lot of promise at this moment. We note that the republican win has ensured a great victory for the entire industry as the likely revocation of the 2.3% medical device excise tax is going to be a big bonus for both the behemoths and small players.

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According to the MedTech community, the cancellation of this tax along with other taxes will directly address issues like lack of opportunity for research and development, innovation, pipeline development, and make investments needed to accelerate patient and provider access to innovative health care products. This will also help in boosting job creation and quality of patient care, offering companies in the space an opportunity to strengthen their position to cope with the new situation.

Let’s take a look at the major MedTech stocks slated to release their Oct-Dec 2016 numbers on Feb 21:

Medtronic plc MDT

This major medical device company is currently plagued by several headwinds including unfavorable currency movement and global economic uncertainties. Also, several legal and regulatory issues pose risks in the short term. However, upside may come from several recent product expansions.

Our proven model does not conclusively show that Medtronic is likely to beat earnings this third-quarter fiscal 2017. This is because 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. You can see the complete list of today’s Zacks #1 Rank stocks here.

Medtronic currently holds a Zacks Rank #4 (Sell) and has an Earnings ESP of -0.90%. That is because the Most Accurate estimate stands at $1.10 while the Zacks Consensus Estimate is pegged higher at $1.11 (read more: Medtronic Q3 Earnings: Disappointment in the Cards?).

Medtronic PLC Price and EPS Surprise

 

Medtronic PLC Price and EPS Surprise | Medtronic PLC Quote

Henry Schein, Inc. HSIC

This leading worldwide distributor of health care products and services expects sluggish dental sales to impact the company’s top line in the quarter to be reported. Year-over-year deterioration in gross and operating margin due to higher cost of sales and expenses is another matter of concern. On a brighter note, Henry Schein recently completed the acquisition of majority stake in Brazil-based Dental Cremer S.A. This will boost the former’s Global Dental business and fortify its position in the Brazilian market. The company is slated to release its fourth-quarter 2016 earnings on Feb 21.

While a Zacks Rank #4 fails to increase the predictive power of the ESP, a 0.00% ESP also makes a surprise prediction uncertain. Both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.84. We note that, in the last reported quarter, the company registered an earnings beat of 1.82% and the trailing 12-month average surprise came in at positive 1.43% (read more: Henry Schein Q4 Earnings: Disappointment in Store?).

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

Henry Schein, Inc. Price and EPS Surprise

 

Henry Schein, Inc. Price and EPS Surprise | Henry Schein, Inc. Quote

Wright Medical Group N.V. WMGI

This global medical device company has an impressive track record of beating estimates in all of its four trailing quarters. Wright Medical’s innovative products are expected to expand its customer base that will eventually drive revenues in the quarter. Also, the company has significant presence in key emerging markets like Asia, which further boosts its long-term prospects. The company is slated to release its fourth-quarter 2016 earnings on Feb 21.

The stock’s Zacks Rank #3 along with a 0.00% ESP makes the surprise prediction uncertain. Both the Most Accurate estimate and the Zacks Consensus Estimate stand at loss of 11 cents (read more: Can Wright Medical Surprise Investors in Q4 Earnings?).

Wright Medical Group N.V. Price and EPS Surprise

 

Wright Medical Group N.V. Price and EPS Surprise | Wright Medical Group N.V. Quote

Merit Medical Systems, Inc. MMSI

This is an interventional and diagnostic procedure developer and manufacturer. The company particularly works on disposable medical devices used in interventional, diagnostic and therapeutic procedures, particularly in cardiology, radiology and endoscopy. The company is expected to release its fourth-quarter 2016 earnings on Feb 21.

The stock’s Zacks Rank #3 along with a 0.00% ESP also makes the surprise prediction uncertain. Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 28 cents. In the last reported quarter, the company registered an earnings beat of 13.4% and the trailing 12-month average surprise was a positive 7.62%.

Merit Medical Systems, Inc. Price and EPS Surprise

 

Merit Medical Systems, Inc. Price and EPS Surprise | Merit Medical Systems, Inc. Quote

Zacks' Top 10 Stocks for 2017

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?

Who wouldn't? Last year's market-beating Top 10 portfolio produced 5 double-digit winners. For example, oil and natural gas giant Pioneer Natural Resources and First Republic Bank racked up stellar gains of +44.9% and +44.3% respectively. Now a brand-new list for 2017 has been hand-picked from 4,400 companies covered by the Zacks Rank.  See the 2017 Top 10 right now>>


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Medtronic PLC (MDT): Free Stock Analysis Report
 
Wright Medical Group N.V. (WMGI): Free Stock Analysis Report
 
Henry Schein, Inc. (HSIC): Free Stock Analysis Report
 
Merit Medical Systems, Inc. (MMSI): Free Stock Analysis Report
 
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Zacks Investment Research