We expect Anthem Inc. (NYSE:ANTM) to beat expectations when it reports first-quarter 2017 results on Apr 26, before the market opens.
Why a Likely Positive Surprise?
Our proven model shows that Anthem has the right combination of the two key ingredients to beat estimates.
Zacks ESP:Anthem has an Earnings ESP of +7.79%. This is because the Most Accurate estimate is pegged at $4.15, while the Zacks Consensus Estimate stands at $3.85. This is a meaningful indicator of a likely positive earnings surprise for the company. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank:Anthem currently carries a Zacks Rank #2 (Buy). Please note that stocks with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating earnings estimates. Conversely, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.
The combination of Anthem’s favorable Zacks Rank and positive Earnings ESP makes us confident of an earnings beat in the upcoming release.
What’s Driving the Better-Than-Expected Earnings?
Anthem is likely to witness solid revenue growth from its Government Business due to the expected surge in enrollment.
Anthem’s plan of growing its Medicare Advantage (MS) plans in 2017 is expected to have started adding to its membership growth.
Management anticipates the company’s self-funded membership to have grown significantly.
However, Anthem may witness higher medical costs for individual ACA-compliant products this quarter as well.
In addition, the company is likely have experienced higher benefit expense ratio from its Medicaid business due to higher claims.
Administrative costs are likely to have risen during the first quarter, continuing the previous trend.
The company suspended its share buyback plan due to its planned merger with Cigna (NYSE:CI) which has now been cancelled. Although management plans to resume its share buyback program in the second quarter of 2017, its first quarter earnings are not likely to be benefitted on this count.
Stocks to Consider
Here are some other companies from the medical sector that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:
Align Technology, Inc. (NASDAQ:ALGN) , which is set to report first-quarter earnings on Apr 27, has an Earnings ESP of +4.48% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Becton, Dickinson and Company (NYSE:BDX) has an Earnings ESP of +0.45% and a Zacks Rank #2. The company is set to report first-quarter earnings on May 4.
Corium International, Inc. (NASDAQ:CORI) has an Earnings ESP of +5.13% and a Zacks Rank #2. The company is set to report first-quarter earnings on May 9.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple (NASDAQ:AAPL) sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>
Corium International, Inc. (CORI): Free Stock Analysis Report
Anthem, Inc. (ANTM): Free Stock Analysis Report
Align Technology, Inc. (ALGN): Free Stock Analysis Report
Becton, Dickinson and Company (BDX): Free Stock Analysis Report
Original post