Will Higher Revenues Drive Vocera's (VCRA) Q4 Earnings?

Vocera Communications, Inc. (NYSE:VCRA) is scheduled to report fourth-quarter 2018 results after the closing bell on Feb 7. In the last reported quarter, the company delivered a positive earnings surprise of 90.9%. Notably, Vocera surpassed the Zacks Consensus Estimate for earnings in each of the last four quarters, the average beat being 125.8%.

For the fourth quarter, the company is likely to report higher revenues on a year-over-year basis, supported by healthy growth trajectory. Whether this could result in an earnings beat remains to be seen.

Factors to Consider

With the right combination of solutions that effectively solve healthcare communication and workflow challenges to create an ideal healing and working environment, Vocera has emerged as one of the leading players in its domain. The company offers an all-inclusive digital platform for hands-free communication via secure text messaging, alert and alarm management.

Leveraging a patent-protected, enterprise-class server software, this integrated communications system provides an advanced clinical rules engine that simultaneously unifies data from multiple sources and prioritizes notifications and sends messages to the right care team members. This, in turn, augments clinical workflow by enabling the interoperability of the solution with a significant number of clinical and operational systems used in hospitals today.

Vocera appears poised to benefit from several mega trends in the healthcare industry. These include a relentless pursuit to improve workforce productivity and reduce caregiver burnout, improvement in patient satisfaction and enhancement of patient throughput in order to sustain margin levels as volume and payer mix continue to erode.

The key drivers for growth are a healthy momentum in bookings and a strong pricing power while its wide swath of integrations continues to be another key differentiator. These integrations enable Vocera's platform to be deeply embedded within the hospital ecosystem and generate a recurring revenue stream. The software mix in revenues is gradually increasing, driven by both new customer shipments and cross-selling success.

With solid organic growth backed by continued strength in demand curve, Vocera is likely to record healthy top-line growth. The Zacks Consensus Estimate for total revenues for the quarter is pegged at $50 million. In the year-earlier quarter, it generated revenues of $46 million.

Earnings Whispers

Our proven model does not conclusively show that Vocera is likely to beat earnings this quarter as it does not possess the key components. 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. This is not the case here as you will see below:

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and Zacks Consensus Estimate, is 0.00% as both are pegged at 18 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Vocera has a Zacks Rank #2. While this increases the predictive power of ESP, we need to have a positive ESP to make us reasonably confident of an earnings beat.

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

Stocks to Consider

Here are some companies 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:

Ciena Corporation (NYSE:CIEN) is expected to release quarterly numbers in early March. It has an Earnings ESP of +1.70% and a Zacks Rank #2.

CommScope Holding Company, Inc. (NASDAQ:COMM) is scheduled to release results on Feb 21. The company has an Earnings ESP of +6.05% and has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for Arista Networks, Inc. (NYSE:ANET) is +2.72% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 14.

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