3 Medical Stocks to Watch Ahead of Earnings
Earnings season is just getting started, but 132 members of the S&P 500 have already released their reports. Analysts are still unsure of whether this quarter will better than last year’s, but the medical sector is showing some positive signs.
The S&P 500 index, as a whole, is expected to show earnings of -9.4% year-over-year, with an expected top-line decline of 0.8%. But the medical sector is expected to grow 2%, particularly the Medical Products subsector. Two companies, Stryker Corp (SYK) and St. Jude Medical Inc. (STJ), both a part of the Medical Products subsector, beat top and bottom estimates last week.
This week, three other Medical Product companies are set to release their results: Baxter International Inc. (BAX), Zimmer Biomet Holdings, Inc. (ZBH) and Boston Scientific Corporation (BSX).
Baxter International Inc. (NYSE:BAX) will release its Q1 results on Tuesday, April 26. Last quarter, the company beat estimates, and analysts are expecting similar results this quarter.
A growing product portfolio will benefit Baxter in the first quarter. The company has also launched several new products, including AMIA APD, SIGMA SPECTRUM and SHARESOURCE, which are expected to have boosted top-line growth. A restructuring program will help reduce operating expenses.
On the negative side, headwind from foreign currency may weigh on the stock.
Zimmer Biomet Holdings, Inc. (NYSE:ZBH) is expected to release its results on April 28 before the opening bell. The company, which produces orthopedic reconstructive products, is expected to beat estimates. Last quarter, Zimmer posted earnings of 2.45%.
The company will face challenges in its dental division, which saw severe headwind in revenue. However, the division is expected to bounce back in the near future.
Revenue is also expected to grow across several product categories.
Boston Scientific Corporation (NYSE:BSX) will release its earnings on April 27. Like the other stocks on this list, the company beat expectations in the final quarter of 2015, and is expected to have strong earnings once again this quarter.
Pricing pressure was worrisome for Boston Scientific, but the company expected this headwind to ease early in 2016 thanks to better price management through market segmentation, cost-reduction and tiered offerings.
The company’s Interventional Cardiology will also contribute to positive results thanks to growth in urology, endoscopy and women’s health.
Investors should keep a close eye on these three stocks ahead of their earnings reports later in the week. With a positive performance in the Medical Products subsector, results are expected to beat estimates.
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