Medical Products Q4 Earnings Due on Jan 31: BSX, TMO & ALGN
The fourth-quarter earnings season for the Medical sector has begun. Per the latest Earnings Preview, quarterly results so far have improved year over year despite the ongoing macroeconomic headwinds in the form of worldwide inflationary pressure and unfavorable foreign exchange headwinds. Going by the sector’s scorecard, 8.3% of the companies in the Medical sector, constituting 25.9% of the sector’s market capitalization, reported earnings till Jan 24. Of these, 60% beat earnings estimates, while 100% beat revenue estimates. Earnings improved 3.3% year over year on 7.9% higher revenues.
However, overall fourth-quarter earnings of the Medical sector are expected to plunge 22.2% despite 4.2% revenue growth. This compares with the third-quarter earnings decline of 16.7% on revenue growth of 6.6%.
The projection reflects a declining overall operating margin scenario. Deteriorating international trade, with global inflationary pressure leading to an extremely tough situation related to raw material and labor costs, and higher medical expenses as well as freight charges have put the industry in a tight spot again. The majority of the players within this space witnessed a rise in raw material costs and other expense pressure through the fourth-quarter months. Added to this, labor-supply constraints, in the form of labordemic and global supply chain hazards, are expected to have moderated the growth process.
Medical Products Quarterly Synopsys
Replicating the market-wide trend, Medical Device stocks or the Zacks-defined Medical Products companies’ collective business growth in the fourth quarter is likely to have been significantly dampened by the ongoing macroeconomic threat in the United States and outside.
Going by the industry-wide trend, logistical challenges and increasing unit costs are likely to have weighed heavily on the corporate profitability of stocks across the board. This difficult macroenvironment continued to restrict capital investments in the fourth quarter, impacting the overall performance of the sector. At the same time, to tackle mounting expenses, companies accelerated their cost-reduction initiatives.
Added to this, through the fourth-quarter months, the companies that are into international trade faced currency headwinds.
Meanwhile, the tightened monetary policy starkly altered consumer preferences and once again put the demand for the non-essential category line of medical products businesses on the back burner. This might have, in a way, shrunk the companies’ revenues in the fourth quarter compared to the prior quarter.
Also, diagnostic testing companies might have once again witnessed a severe year-over-year decline in testing demand.
Medical products companies like Boston Scientific BSX, Thermo Fisher Scientific TMO and Align Technologies ALGN are likely to have been influenced by these abovementioned factors in the fourth quarter.
On a positive note, during the post-pandemic phase, the key focus of medical device R&D shifted from COVID-related PPE, testing and distant care options to point-of-care testing, heavy as well as minimally invasive implants, elective procedures and so forth. Accordingly, legacy-based business recovery and testing demand of the companies through the months of the fourth quarter are expected to have been impressive. Meanwhile, AI and robotics for the medical Internet of Things (IoT), which rose to the limelight during the pandemic phase, remained popular.
Let's take a look at three Medical Products players scheduled to announce fourth-quarter results on Jan 31.
Boston Scientific: With U.S. hospitals reporting an increase in the number of procedure volumes during the months of the fourth quarter of 2023, Boston Scientific, with its innovative pipeline, expansion into faster growth markets, globalization efforts and enhanced digital capabilities, is well-positioned to register decent results for this period. However, the rate of growth is expected to have remained sluggish amid a challenging supply environment in limited geographies, particularly in Europe, through the months of the fourth quarter. Further, given the ongoing inflationary situation, the business is expected to have faced the hurdle of surging labor and raw material costs, which might have weighed on BSX’s bottom line in the fourth quarter.
(Read more: What's in Store for Boston Scientific in Q4 Earnings?)
The Zacks Consensus Estimate for fourth-quarter total revenues is pegged at $3.59 billion, suggesting an improvement of 10.7% from the prior-year quarter’s reported number. The consensus mark for adjusted earnings stands at 51 cents per share, implying a 13.3% rise from the year-ago quarter’s reported figure.
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.
BSX has an Earnings ESP of 0.00% and carries a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Boston Scientific Corporation Price and EPS Surprise
Boston Scientific Corporation price-eps-surprise | Boston Scientific Corporation Quote
Thermo Fisher: Its Analytical Instruments segment is expected to have generated strong sales in the fourth quarter, banking on chromatography, mass spectrometry and the electron microscopy businesses. Per our model, Thermo Fisher’s Analytical Instruments’ fourth-quarter revenues are estimated to be $1.95 billion, suggesting 3.7% growth year over year.
Within the Life-Science Solutions segment, the company is expected to have registered a decline due to moderation in pandemic-related revenues. Unfavorable macroeconomic conditions and foreign currency fluctuations might have impeded growth in the fourth quarter.
(Read more: What's in Store for Thermo Fisher in Q4 Earnings?)
The Zacks Consensus Estimate for Thermo Fisher’s fourth-quarter 2023 revenues is pegged at $10.74 billion, suggesting a decline of 6.2% from the year-ago reported figure. The Zacks Consensus Estimate for its fourth-quarter 2023 EPS of $5.64 indicates a year-over-year rise of 4.4%.
TMO has an Earnings ESP of 0.00% and carries a Zacks Rank #3.
Thermo Fisher Scientific Inc. Price and EPS Surprise
Thermo Fisher Scientific Inc. price-eps-surprise | Thermo Fisher Scientific Inc. Quote
Align Technologies: Despite the difficult macroeconomic challenges and soft consumer trends that Align Technologies faced throughout 2023, we expect the company’s worldwide revenues to have grown in the fourth quarter, banking on an improving volume environment. The number of Clear Aligner shipments to teenage and younger patients is likely to have been robust, driven by the continued strength of Invisalign First.
(Read more: Align Technology to Post Q4 Earnings: What's in Store?)
The Zacks Consensus Estimate for the company’s fourth-quarter 2023 revenues is pegged at $928.4 million, suggesting a rise of 2.9% from the year-ago reported figure. The Zacks Consensus Estimate for fourth-quarter 2023 earnings of $2.17 indicates a 25.4% rise from the year-ago reported figure.
ALGN has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Align Technology, Inc. Price and EPS Surprise
Align Technology, Inc. price-eps-surprise | Align Technology, Inc. Quote
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