ZBH & IDXX Q4 Earnings On Feb 1: Here Are The Key Predictions

This week seems a busy one as several Q4 earnings reports are queued up for release. Of the line-up, musculoskeletal healthcare stalwart Zimmer Biomet Holdings, Inc. (NYSE:ZBH) and animal health player IDEXX Laboratories, Inc. (NASDAQ:IDXX) are slated to announce fourth-quarter 2018 results on Feb 1.

The past few months were remarkably rewarding for the global medical device space in terms of research and development (R&D) and regulatory progress. Last November, the FDA made a remarkable update on its attempt to modernize its 510(k)-clearance pathway, which accounts for the majority of devices that the FDA reviews. Per a December article published in Investing News, “the changes are meant to create a safer product for patients while holding companies accountable for any safety discrepancies, all while holding on to the FDA’s gold standard for safety.” Previously, the FDA approved a gene therapy treatment for inherited retinal disease.

Meanwhile, Big Data and Internet of Things (IoT) has reached the next level of healthcare application and is used for patient monitoring in hospitals and for post-operative care. This sector is seeing an increased use of cloud-based applications and AI. This space is expanding fast and is holding enormous potential, which is reflected through a recent Markets and Markets report. The story suggests that the global IoT medical devices market is projected to reach $63.43 billion by 2023 from $20.59 billion in 2018 at a CAGR of 25.2% during the forecast period.

Moreover, with obstructive sleep apnea (OSA) on the rise, Neuromodulation is proven to be a better treatment option for the ailment than popular treatments like a CPAP machine.

Overall, per the latest Earnings Preview, earnings for the medical sector (medical device or MedTech is integral to this space) in fourth-quarter 2018 are projected to rise 7.7% year over year while revenues are expected to be up 6.2%.

Let’s get a glimpse of how the above two stocks are placed ahead of the impending quarterly results.

Zimmer Biomet Holdings

Zimmer Biomet is again anticipated to fare well this reporting cycle with strong top-line numbers for its S.E.T. (Surgical, Sports Medicine, Foot and Ankle, Extremities and Trauma) arm, backed by a firm focus on priority areas like quality remediation, supply recovery and product launches.

Zimmer Biomet Holdings, Inc. Price and EPS Surprise

Zimmer Biomet Holdings, Inc. Price and EPS Surprise | Zimmer Biomet Holdings, Inc. Quote

The company is receiving a consistent positive feedback on the already marketed products. Within Sports, Comprehensive Baseplate, Sidus Stem-Free Shoulder and jogger stitch are envisioned to see a favorable response. Within Extremities and Trauma subcategories, the company is investing a lot as well. We are also optimistic about a solid customer uptake of the company’s Comprehensive Augmented Baseplate.

The Zacks Consensus Estimate of $455 million for S.E.T. revenues remains marginally above $454 million recorded in fourth-quarter 2017. (Read more: Can Zimmer Biomet Grow on Hip Business in Q4 Earnings?)

Zimmer Biomet’s Earnings ESP is +0.05%. It currently carries a Zacks Rank # 3 (Hold), which increases the predictive power of ESP. Thus, the combination of a positive ESP and a top Zacks Rank makes us reasonably confident of a likely earnings surprise. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

IDEXX Laboratories

IDEXX should continue with its momentum in the fourth quarter, courtesy of a sturdy global rise in Companion Animal Group (CAG) Diagnostics' revenues. In the third quarter, this upside was driven by steady gains from recurring CAG revenues, high premium CAG instrument placements and a consistent uptick in digital business. This trend is likely to be retained further.

IDEXX Laboratories, Inc. Price and EPS Surprise

IDEXX Laboratories, Inc. Price and EPS Surprise | IDEXX Laboratories, Inc. Quote

In terms of 2018 outlook, IDEXX will hopefully generate full-year organic growth in CAG Diagnostic recurring revenues at around 13.2%, supported by a stable progress in the United States and expanding international consumable revenues.

The Zacks Consensus Estimate of $474 million for CAG Diagnostics revenues represents a 9.4% improvement over the last reported quarter. (Read more: Can CAG Growth Steadily Drive IDEXX in Q4 Earnings?)

IDEXX has a Zacks Rank of 3, which increases the predictive power of ESP. However, it has an Earnings ESP of -1.11%, which leaves surprise prediction inconclusive as only a positive ESP in the combination could have raised the odds of a likely earnings beat.

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