Will Stryker Miss Earnings this Quarter? - Analyst Blog
23 Aprile 2013 - 4:30PM
Zacks
Stryker Corp.
(SYK) is set to report its first-quarter 2013 results after the
market closes on Wednesday, Apr 24. Let’s see how things are
shaping up prior to the announcement.
In the last quarter, the orthopedic devices major posted a 0.88%
positive earnings surprise. Higher domestic sales and cost
containment measures were largely offset by weak international and
capital equipment sales.
Factors to Consider this Quarter
Stryker, with a market-cap of $24.41 billion, is one of the largest
medical device manufacturers operating in the global orthopedic
market. Its well-diversified product portfolio, expanding foothold
in emerging markets along with acquisitions are expected to drive
future growth. The performance of the core Reconstructive business,
which has showed signs of a turnaround recently, is vital for
the company.
However, we are concerned about the impact of the warning letter
from the U.S. Food and Drug Administration (“FDA”) to Stryker’s
Instruments division as well as other product recalls, which are
plaguing the company. Additionally, other challenges such as soft
international sales, particularly in Europe, and tough hospital
capital budgets pose major headwinds.
Earnings Whispers?
Our proven model does not conclusively show that Stryker is likely
to beat earnings estimates this quarter. That is because a stock
needs to have both a positive Earnings ESP (Read: Zacks Earnings
ESP: A Better Method) as well as a Zacks Rank of #1, 2 or 3 for
this to happen. This is not the case here as you will see
below.
Zacks Earnings ESP: The Most Accurate
Estimate stands at $1.00, while the Zacks Consensus Estimate is
pegged at $1.01. This comes to a difference of -0.99%.
Zacks Rank #3 (Hold): Stryker’s Zacks Rank #3
(Hold) lowers the predictive power of ESP. The Zacks Rank #3
together with -0.99% earnings ESP makes surprise prediction
difficult.
Moreover, we caution against stocks with Zacks Ranks of #4 and #5
(Sell rated stocks) before going into the earnings announcement,
especially when the company is experiencing negative estimate
revisions.
Other Stocks to Consider
Here are some other companies you may want to consider as our model
shows they have the right ingredients to post an earnings beat this
quarter:
Coventry Health Care Inc. (CVH), Earnings ESP of
+3.80% and a Zacks Rank #2 (Buy)
Haemonetics Corporation (HAE), Earnings ESP of
+2.17% and a Zacks Rank #3 (Hold)
Covidien plc (COV), Earnings ESP of +0.91% and a
Zacks Rank #3 (Hold)
COVIDIEN PLC (COV): Free Stock Analysis Report
COVENTRY HLTHCR (CVH): Free Stock Analysis Report
HAEMONETICS CP (HAE): Free Stock Analysis Report
STRYKER CORP (SYK): Free Stock Analysis Report
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