As of Jul 27, around 208 members of the S&P 500 index have reported their Q2 results and, according to our latest Earnings Outlook report, the picture so far has been a dreary one with lackluster earnings pointing to the fifth straight quarter of negative earnings growth. While analysts are into argument as to whether the extent of this decline is gradually diminishing compared to the last two quarters, we have some good news for investors keen on the Medical sector.
As per the report, Medical is one of the 7 broader sectors among the 16 Zacks sectors which are predicted to report earnings growth. The sector is expected to deliver 2.3% earnings growth on the back of 7.7% higher revenues in the second quarter. So far 36.5% of the members from this sector have made their quarterly earnings releases with earnings and revenue beats both standing at a very impressive 84.2%.
What’s in Store for the Med-Product Space?
Medical instrument, an important division of the medical device subcategory within the broader Medical sector, holds a lot of potential at this moment. According to a survey by KPMG, the companies under this category that expect to spend more than 6% of revenue on R&D/innovation are rising and are fast outpacing the number of companies spending on R&Ds in other manufacturing industries. These innovations and breakthroughs can be of various forms – new products or surgical techniques or cost-effective products targeting the emerging markets.
Let’s take a look at the major Medical Instrument stocks slated to release their quarterly reports on Aug 1:
Avinger, Inc. (NASDAQ:AVGR)
This commercial-stage medical device company provides image-guided and catheter-based systems to treat peripheral arterial disease (PAD) patients. It operates in the U.S. and Europe.
Avinger is scheduled to report second-quarter 2016 numbers on Aug 1. However, our proven model does not conclusively show that Avinger is likely to beat estimates this quarter. 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. That is not the case here. Avinger currently carries a Zacks Rank #4 (Sell) and has an Earnings ESP of 0.00%. That is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of $1.18. We also note that Avinger’s trailing four-quarter earnings surprise is a negative 1.63%.
Exactech Inc. (NASDAQ:EXAC)
This company is a provider of orthopedic implant devices, related surgical instrumentation, and biologic services. Its popular products include Equinoxe for extremities; a platform shoulder system for the treatment of degenerative disease and trauma; and knee system.
Exactech is slated to report its second-quarter 2016 numbers on Aug 1. While a favorable Zacks Rank #3 increases the predictive power of the ESP, a 0.00% ESP makes a surprise prediction difficult. We note that, while in the last reported first quarter, the company registered an earnings beat of 3.33%, the trailing four-quarter average surprise is a negative 3.37%.
Glaukos Corporation (NYSE:GKOS)
This is an ophthalmic medical technology company specializing in glaucoma treatment. It is scheduled to report its second-quarter 2016 numbers on Aug 1. The stock carries a Zacks Rank #3 and has an Earnings ESP of 0.00%. That is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 5 cents.
We note that last quarter, the company posted a positive earnings surprise of 118.75%. Encouragingly, Glaukos’ earnings surpassed the Zacks Consensus Estimate in three out of the past four quarters, with an average beat of 52.42%.
EXACTECH INC (EXAC): Free Stock Analysis Report
AVINGER INC (AVGR): Free Stock Analysis Report
GLAUKOS CORP (GKOS): Free Stock Analysis Report
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