Benefits of medical products shares on April 28: TMO, BIO and more

The first quarter earnings season for the medical sector started last week. The latest earnings overview reflects a strong year-over-year improvement in quarterly performance so far in this reporting cycle. According to the industry scorecard, 7% of companies in the medical sector, constituting nearly 27.6% of the sector’s market capitalization, reported profits through April 22. Of these, 100% beat earnings estimates and 75% beat the same for revenue. Profits rose 8.4% year over year on the back of revenue up 13.5%.

This dashboard reflects the current stability in the United States on the continued economic reopening. However, a number of MedTech players faced severe staff shortages and supply chain vagaries in the first quarter, thanks to the emergence of new COVID variants.

Overall, first-quarter medical profits are expected to rise 10.3% on a 13.3% increase in sales. That compares to reported earnings growth of 27.8% and revenue growth of 14.3% in the fourth quarter. It is worth mentioning that the medical sector is expected to be one of the nine sectors that are expected to register profit growth in the first quarter of 2022.

Quarterly summary of medical products

An integral part of the broader medical industry, the collective business growth of the medical product companies defined by Zacks is expected to have shown an improvement over last year, with a significant increase in the vaccination campaign and a reduction in related deaths. to COVID in the United States and other developed countries. The dynamic nature of the COVID-19 crisis has been a roller coaster ride for the medical products industry over the past few months.

In the recent past, companies in this space had experienced a sharp decline in their core business. However, results for the majority of medical product stocks have so far shown accelerated growth in non-COVID business in the first quarter months compared to 2020 on a reduction in the severity of COVID-19 despite the emergence new virus variants. Overall, the recovery of the companies’ legacy core businesses during the first quarter months was impressive. Medical product companies like Thermo Fisher Scientific OMT, Bio-Rad Laboratories ORGANIC, LabCorp HL and ResMed RMD is likely to have been impacted by these factors in the first quarter.

It should be mentioned here that disruptions in the form of the emergence of more contagious COVID-19 variants like Delta, Omicron and XE are still evident in many developed countries. A number of MedTech players faced severe staffing shortages and supply chain uncertainties during the first quarter months. As a result, many industry players have witnessed a decline in their business performance on a sequential basis.

In addition, first-quarter results from diagnostic testing companies showed lower demand for testing so far, due to declining cases, which has dampened business growth for many companies.

Let’s take a look at four Medical Products players who are due to announce their results on April 28th.

Thermo Fisher Scientific: During the first quarter months, Thermo Fisher’s analytical instruments segment should have generated strong sales thanks to the flourishing electron microscopy, chromatography and mass spectrometry businesses. The company is expected to record growth driven by a favorable business mix and a strong increase in volumes and productivity enabled by the PPI trading system. (Read more: Thermo Fisher to report Q1 results: what’s in store?)

Zacks’ consensus estimate for total revenue of $10.63 billion for the first quarter suggests a 7.3% increase over the reported figure for the year-ago quarter. The consensus mark for Thermo Fisher’s earnings of $6.17 per share indicates a decline of 14.4% from the reported figure for the year-ago quarter.

According to our proven model, a stock with the combination of a positive earnings ESP and a Zacks rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates. However, this is not the case as you can see below.

TMO has an ESP on earnings of -1.20% and carries a Zacks rank #3. You can discover the best stocks to buy or sell before they’re flagged with our earnings ESP filter.

Thermo Fisher Scientific Inc. Prize and EPS Surprise

Thermo Fisher Scientific Inc. price-eps-surprise | Quote from Thermo Fisher Scientific Inc.

You can see the full list of today’s Zacks #1 Rank stocks here.

Bio-Rad Laboratories: Bio-Rad’s life sciences segment has seen robust revenue growth in recent quarters. We expect this growth momentum to continue in the first quarter thanks to continued sales growth in the Polymerase Chain Reaction (PCR), Droplet Digital PCR (dPCR), Process Media and Western Blot businesses. The company also saw strong growth in the biopharmaceutical market for the Droplet Digital PCR platform, which is expected to have made a significant contribution to first quarter revenue. (Read more: Bio-Rad to report Q1 earnings: What’s in the cards?)

Zacks’ consensus estimate for Bio-Rad’s first-quarter revenue is set at $678 million, implying a 6.7% decline from the prior year’s figure. The consensus estimate for earnings per share is set at $2.80, suggesting a decline of 46.3% from the figure reported the previous year.

BIO has a Gain ESP of 0.00% and a Zacks Rank #3.

BioRad Laboratories, Inc. EPS Awards and Surprise

BioRad Laboratories, Inc. EPS Awards and Surprise

BioRad Laboratories, Inc. price-eps-surprise | BioRad Laboratories, Inc. Quote

LabCorp: LabCorp recorded a continued rebound in sales in the core business for the Diagnostics and Drug Development segments. However, as the effects of the pandemic fade, we expect demand for COVID-19 testing services to gradually decline, which will impact first quarter sales performance. In the fourth quarter of 2021, the company reported higher adjusted operating income and improved margins within the core business, given organic growth and LaunchPad cost savings. According to the fourth quarter earnings call, the company has implemented a new LaunchPad business process improvement initiative, which is expected to generate $350 million in savings over the next three years. The new initiative is expected to have helped the company’s margin in the first quarter. (Read more: LabCorp to Report First Quarter Results: What’s in the Cards?)

Zacks’ consensus estimate for first-quarter earnings of $5.88 a share implies a 33.1% drop from the figure reported a year ago. The consensus revenue estimate is set at $4.04 billion, suggesting a 2.9% drop from the figure reported the previous year.

LH has an ESP on Earnings of -0.22% and a #3 Zacks Rank.

Laboratory Corporation of America Holdings award and EPS surprise

Laboratory Corporation of America Holdings award and EPS surprise

Laboratory Corporation of America Holdings price-eps-surprise | Quote from Laboratory Corporation of America Holdings

ResMed: ResMed is expected to have benefited in the third quarter of fiscal 2022 from increased demand for sleep and respiratory care devices thanks to the steady recovery of markets following the impacts of COVID-19 and the recall of products from a competitor. Growth in home medical equipment and home care facilities should have contributed to the revenue growth in the SaaS business. Continued robust adoption of ResMed’s AirSense 10 and AirSense 11 platforms reinforces optimism for the company. These developments likely contributed to the company’s revenue in the upcoming quarter.

Zacks consensus estimate for its fiscal third quarter earnings per share is set at $1.44. Revenue is expected to be $908.7 million.

RMD has an ESP of 0.00% and Zacks Rank #3.

ResMed Inc. Award and EPS Surprise

ResMed Inc. Award and EPS Surprise

ResMed Inc. price-eps-surprise | Quote ResMed Inc.

Stay on top of upcoming earnings announcements with Zacks Earnings Calendar.

Zacks names ‘only one best choice for doubling up’

From thousands of stocks, 5 Zacks experts have each picked their favorite to skyrocket by +100% or more in the coming months. Of these 5, Research Director Sheraz Mian selects one to have the most explosive advantage of all.

It’s a little-known chemical company that’s up 65% year-on-year, but still very cheap. With relentless demand, rising earnings estimates for 2022 and $1.5 billion for stock buybacks, retail investors could step in at any time.

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Laboratory Corporation of America Holdings (LH): Free Stock Analysis Report

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BioRad Laboratories, Inc. (BIO): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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