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What's in Store for These 4 Medical Products Stocks in Q1 Earnings?

Several large-cap MedTech players have already announced first-quarter results. Among them, Abbott Laboratories and Walgreens Boots Alliance topped earnings and sales estimates. However, Neogen lagged both earnings and revenue estimates and grappled with ongoing macroeconomic issues. A similar trend is expected to be reflected in the results of other industry players.

Some major industry players like Boston Scientific, Inc. BSX, Thermo Fisher Scientific, Inc. TMO, Align Technology, Inc. ALGN and ICON plc ICLR are set to report results tomorrow.

Q1 Preview and Scorecard

Per the latest Earnings Preview, quarterly results of the Medical sector have declined year over year, affected by the ongoing macroeconomic headwinds primarily in the form of worldwide geopolitical issues and healthcare labor shortages. Going by the broader Medical sector’s scorecard, 5% of the companies in the Medical sector, constituting 19.4% of the sector’s market capitalization, reported earnings till Apr 17. Of these, earnings dropped 0.3% year over year on 3.7% higher revenues. However, 100% of these companies beat earnings and 66.7% beat revenue estimates, which were already down because of the ongoing macroeconomic issues.

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Overall, first-quarter earnings of the Medical sector are expected to drop 5.6% on 6.1% revenue growth. This compares with the fourth-quarter earnings decline of 17.1% on revenue growth of 7%.

Factors Likely to Influence MedTech Stocks’ Results

Replicating the broader market trend, MedTech or the Zacks-defined Medical Products companies’ collective business growth in the first quarter is likely to have stabilized. With the pandemic-related crisis gone, the industry is experiencing rapid adoption of generative Artificial Intelligence (genAI) and digital therapies, which market observers predict will take the healthcare business by storm.

The use of artificial intelligence (AI) and the Internet of Medical Things — which provide digital healthcare alternatives in hospitals and other healthcare settings — has actually been taking place in the business since the beginning of 2023. Clinical results are better with digital augmentation, even when expenses are maximized. This trend is expected to be prominently visible in the first-quarter results of the pure-play MedTech stocks.

Macro trends that are setting the stage for even more innovation and investment in this space are the aging population, growing healthcare awareness and increasing access to better health options. Favorable impacts from these are expected to be readily seen through the Q1 performances.

Yet, the industry is once again in a difficult position due to the worsening geopolitical environment, supply chain bottlenecks that result in high costs for labor and raw materials as well as freight and a shortage of healthcare workers.

Also, diagnostic testing companies have been witnessing a severe year-over-year decline in testing demand, compared to strong demand in the year-ago period for COVID-19 testing products.

MedTech Stocks to Watch

Boston Scientific: Boston Scientific, with its innovative pipeline, expansion into faster growth markets, globalization efforts and enhanced digital capabilities, looks well-positioned to report decent first-quarter results as U.S. hospitals are expected to report an increase in procedure volumes through the months of 2024. The company is expected to have registered strong growth in the Asia Pacific, led by strength in China, Japan and Latin America. Growth in Japan is expected to have been fueled by new products, most notably AGENT DCB, Rezum, POLARx FIT and WATCHMAN FLX.

However, the rate of growth is expected to have remained sluggish amid a challenging supply environment in limited geographies.

(Read more: What's in Store for Boston Scientific in Q1 Earnings?)

The Zacks Consensus Estimate for first-quarter total revenues is pegged at $3.68 billion, indicating an improvement of 8.5% from the prior-year quarter’s reported number.

Boston Scientific Corporation Price and EPS Surprise

 

Boston Scientific Corporation Price and EPS Surprise
Boston Scientific Corporation Price and EPS Surprise

Boston Scientific Corporation price-eps-surprise | Boston Scientific Corporation Quote

 

The consensus mark for adjusted earnings stands at 51 cents per share, suggesting an 8.5% rise from the year-ago quarter’s reported figure.

During the first quarter (ending Mar 31), the company’s shares increased 18.5% compared with the industry’s 7.5% growth.

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. This is not the case, as you can see below.

Earnings ESP: Boston Scientific has an Earnings ESP of 0.00% and carries a Zacks Rank of 4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Thermo Fisher: The company is expected to have generated strong sales in the first quarter of 2024 from strong productivity and volume leverage within the pharma services business and the research and safety market channel. In November 2023, TMO extended its ongoing partnership with Flagship Pioneering to develop and commercially scale multi-product platforms on an accelerated basis. This partnership has been expanded to include Flagship's network of businesses through the newly-formed strategic partnership, which makes use of the companies' knowledge in the fields of life science tools, diagnostics and services. We believe these developments to have contributed to the company’s top line in the to-be-reported quarter.

The Zacks Consensus Estimate for first-quarter total revenues is pegged at $10.14 billion, suggesting a 5.3% fall from the prior-year quarter’s reported figure. The consensus mark for earnings is pegged at $4.71 per share, indicating a 6.4% decline from the year-ago quarter’s reported figure.

During the first quarter (ending Mar 31), the stock increased 9.6% compared with the industry’s 9.4% growth.

Thermo Fisher Scientific Inc. Price and EPS Surprise

 

Thermo Fisher Scientific Inc. Price and EPS Surprise
Thermo Fisher Scientific Inc. Price and EPS Surprise

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

 

Thermo Fisher has an Earnings ESP of 0.00% and carries Zacks Rank #3.

(Read more: What's in Store for Thermo Fisher in Q1 Earnings?)

Align Technology: Align Technology is likely to have witnessed strength in Clear Aligner volumes for teens and international doctors in the first quarter of 2024. It is also expected to have registered continued growth from Invisalign touch-up cases, driven by the Invisalign Doctor Subscription Program. On a geographic basis, clear aligner volumes may have witnessed a sequential increase in Invisalign shipments from the APAC and Latin American regions as well as North American Invisalign teenage cases. Key markets within APAC, such as India, Taiwan, Korea, Japan and Thailand, are also expected to have witnessed an upward growth trend in clear aligner volumes.

The Zacks Consensus Estimate for Align Technology’s first-quarter 2024 revenues is pegged at $972.4 million, suggesting growth of 3.1% from the year-ago reported figure. The Zacks Consensus Estimate for the company’s first-quarter EPS of $1.96 indicates a 7.7% improvement from the year-ago reported figure.

Meanwhile, during the first quarter (ending Mar 31), shares of the company rallied 19.7% compared to the industry’s 7.9% growth.

Align Technology, Inc. Price and EPS Surprise

 

Align Technology, Inc. Price and EPS Surprise
Align Technology, Inc. Price and EPS Surprise

Align Technology, Inc. price-eps-surprise | Align Technology, Inc. Quote

 

Align Technologies has an Earnings ESP of 0.00% and carries a Zacks Rank #2.

(Read more: Align Technology to Post Q1 Earnings: What's in Store?)

ICON: ICON’s innovative and scaled offerings are resonating well with customers and strongly position ICON for further traction in new and existing customer accounts. In line with this, in the fourth quarter, ICON was awarded a new full-service strategic partnership with a top 20 pharma customer, creating significant new business potential in Phase I-IV studies across a number of therapeutic areas in their portfolio. We believe this development to have a favorable impact on ICON’s first-quarter 2024 performance. We are also upbeat about the company’s recently introduced latest version of the ICON digital platform — an end-to-end solution to enable patient-centric decentralized clinical trials.

The Zacks Consensus Estimate for ICON’s first-quarter 2024 revenues is pegged at $2.09 billion, suggesting growth of 5.6% from the year-ago reported figure. The Zacks Consensus Estimate for the company’s first-quarter EPS of $3.44 indicates an 18.6% improvement from the year-ago reported figure.

In the first quarter (ending Mar 31), the company’s shares have rallied 18.7% compared with the industry’s 8.2% growth.

ICON PLC Price and EPS Surprise

 

ICON PLC Price and EPS Surprise
ICON PLC Price and EPS Surprise

ICON PLC price-eps-surprise | ICON PLC Quote

 

ICON has an Earnings ESP of -0.79% and carries a Zacks Rank #2.

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