Covidien Likely to Beat Earnings? - Analyst Blog
24 Aprile 2013 - 5:00PM
Zacks
We expect major healthcare company,
Covidien plc (COV) to beat expectations when it
reports second-quarter fiscal 2013 results on Apr 26.
Why a Likely Positive Surprise?
Our proven model shows that Covidien is likely to beat earnings
because it has the right combination of two key ingredients.
Positive Zacks ESP: Earnings ESP (Read: Zacks
Earnings ESP: A Better Method), which represents the difference
between the Most Accurate Estimate and the Zacks Consensus
Estimate, is at +0.91%. This is a very meaningful and leading
indicator of a likely positive earnings surprise for shares.
Zacks Rank #3 (Hold): Covidien has a Zacks Rank #3
(Hold). Note that stocks with Zacks Ranks of #1, #2 and #3 have a
significantly higher chance of beating earnings. The sell rated
stocks (#4 and #5) should never be considered going into an
earnings announcement.
The combination of Covidien’s Zacks Rank #3 (Hold) and +0.91% ESP
makes us very confident in looking for a positive earnings beat on
Apr 26.
What is Driving the Better Than Expected
Earnings?
A host of factors such as solid top-line growth on the back of
acquisitions (focused on emerging markets) and new offerings along
with a share repurchase program are expected to lead to a positive
earnings surprise in the upcoming quarter.
The positive trend is seen in the trailing four-quarter average
surprise of 2.16%, which was greatly helped by the 3.77% surprise
in the last-reported quarter. This was mainly due to an efficient
management team capable of delivering solid results despite a
difficult Medtech space.
Other Stocks to Consider
Here are some other companies that may be considered 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)
Hanger Inc. (HGR), Earnings ESP of +8.00% and
Zacks Rank #3 (Hold)
Haemonetics Corporation (HAE), Earnings ESP of
+2.17% 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
HANGER ORTHOPED (HGR): Free Stock Analysis Report
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