Inogen (INGN) Q2 Earnings: Can The Stock Pull A Surprise?

Inogen Inc. (NASDAQ:INGN) is scheduled to report second-quarter 2016 results on Aug 4. Last quarter, the company reported earnings of 11 cents per share, missing the Zacks Consensus Estimate by a penny.

Notably, the company has beat the Zacks Consensus Estimate in all of the last four consecutive quarters, with an average earnings surprise of 26.25%.

Let us see how things are shaping up for this announcement.

Factors Influencing This Quarter

We believe Inogen’s unique direct-to-customer business model, innovative product portfolio and growing patient base will drive significant top-line growth. Expansion of the company’s direct-to-consumer network and shift to cash sales of systems will boost margins. Meanwhile, new products, like the upgraded Inogen One G3 and the recently launched Inogen One G4, are expected to drive growth further.

However, anticipated changes in Medicare reimbursements will hurt rental revenues, going forward. Moreover, it has been proposed that Medicare patients should take prior authorization for stationary oxygen services. We believe that this will delay the process of issuing new systems on a rental basis, which will eventually hurt Inogen's top line.

Earnings Whispers

Our proven model does not conclusively show that Inogen is likely to beat earnings this quarter. That 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 as you will see below.

Zacks ESP: Inogen has a 0.00% ESP. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 19 cents.

Zacks Rank: Inogen carries a Zacks Rank #3, which increases the predictive power of ESP; but when combined with a 0.00% ESP, it makes surprise prediction difficult.

We caution against stocks with a Zacks Ranks #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some health care stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.

GlycoMimetics Inc. (NASDAQ:GLYC) with an Earnings ESP of +13.64% and Zacks Rank #1.

Zoetis Inc. (NYSE:ZTS) with an Earnings ESP of +2.27% and Zacks Rank #1.

ANI Pharmaceuticals Inc. (NASDAQ:ANIP) with an Earnings ESP of +2.63% and a Zacks Rank #1.