4 Healthcare Stocks to Top Q3 Estimates Amid Coronavirus Woes

·5 min read

The healthcare sector is one of the largest and the most complex in U.S. economy.  Healthcare spending reflects a significant portion of the nation's GDP.

The same has been increasing at a higher rate ever since the pandemic. The overall sector is poised well for growth on the back of its aging population and demand for products and services induced by the pandemic. In the to-be-reported quarter, the sector is expected to have seen an upside.

However, escalating costs incurred by companies for investment in technology, development of new products and services and adapting to the new environment created by the COVID-19 pandemic might have dented earnings to some extent.

The sector encompasses a diversified industry varying from health insurance, hospitals, nursing homes, medical devices to pharmaceuticals and others with operations strikingly different from one another. This space is expected to experience a mixed impact from the COVID-19 condition in the impending quarterly release.

Below we discuss how some of the industries are placed ahead of their respective third-quarter earnings announcements:

Health Insurers: So far, the industry players have delivered favorable results for the to-be-reported quarter. For instance, UnitedHealth Group Incorporated UNH reflected a favorable position for the industry with respect to the coronavirus adversity. Its third-quarter results of $4.52 per share outpaced the Zacks Consensus Estimate by 2.5%. The bottom line increased 28.8% year over year on revenue growth.

Anthem Inc.’s ANTM third-quarter 2021 earnings of $6.79 per share beat the Zacks Consensus Estimate by 6.9% owing to better revenues. Insurers are expected to gain from government-sponsored plans, namely Medicare Advantage and Medicaid, partly offset by escalating expenses.

In the third quarter, the Zacks Health Insurance industry lost 4.9% against the Zacks S&P 500 composite’s increase of 0.1%.

Hospitals: Despite the partial blow from the COVID-19 pandemic, the industry players are likely to gain from better patient volumes and improved admissions, thus leading to higher revenues.

Companies are resuming their elective procedures, which will further boost their revenues. For instance, two leading players, namely Tenet Healthcare Corporation THC and HCA Healthcare, Inc. HCA gained from increased revenues and solid patient volumes in the third quarter.

In the third quarter, the Zacks Hospital industry gained 8.2%.

Telehealth Providers: The companies providing telehealth services proved to be a clear success as demand for telemedicine and telehealth services witnessed a sharp rise, largely owing to homebound Americans who are on pandemic-triggered lockdown. Given the current scenario, we expect demand for this service to stay. We expect companies like Teladoc Health, Inc. TDOC to gain from a rise in sales.

The Zacks Medical Services industry has 18.4% in the third quarter.

Pharmacies & Drug Stores: As the economic condition is improving, the pharmacies and drug stores industry, which took a hit from the shutdown, is slowly recovering. The market includes sales of prescription and over-the-counter drugs, health and beauty items, toiletries and consumable goods, etc. The given COVID-19 situation, aging population and health awareness across the globe poise the industry well for growth.

The Zacks Retail - Pharmacies and Drug Stores industry gained 0.5% in the third quarter.

Sector Projections

The latest Earnings Trends indicate that the Medical sector’s third-quarter bottom line is expected to jump 17.5% while the top line is likely to climb 13.2%.

Stocks That Are Poised to Beat

Some healthcare stocks are poised to beat on third-quarter earnings. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise for these companies. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Our chosen stocks have the right combination of elements to deliver a positive surprise this season.

ACADIA Pharmaceuticals Inc. ACAD is presently Zacks #3 Ranked and has an Earnings ESP of +0.87%. It has an expected earnings growth rate of 50% for the third quarter. The company came up with a trailing four-quarter earnings surprise of 0.3%, on average.

MEDNAX, Inc. MD currently has a Zacks Rank #3 and an Earnings ESP of +4.41%. It has an earnings growth forecast of 13.5% for the third quarter. You can see the complete list of today’s Zacks #1 Rank stocks here. The company’s bottom line beat estimates in two of its trailing four quarters (while missing in the remaining two), the average surprise being 14.4%.

Acadia Healthcare Company, Inc. ACHC has an Earnings ESP of +3.00% and a Zacks Rank of 3, presently. It has an earnings growth prediction of 5.88% for the third quarter. Its bottom line beat estimates in all the trailing four quarters, the average being 26.1%.

Vertex Pharmaceuticals Incorporated VRTX is currently a #3 Ranked payer and has an Earnings ESP of +10.62%. Its earnings growth projection is 18.2%.
The company’s bottom line beat the consensus mark in three of its last four quarters (while missing the same in one), the average surprise being 7.1%.

 


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UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report
 
Vertex Pharmaceuticals Incorporated (VRTX) : Free Stock Analysis Report
 
Tenet Healthcare Corporation (THC) : Free Stock Analysis Report
 
MEDNAX, Inc. (MD) : Free Stock Analysis Report
 
HCA Healthcare, Inc. (HCA) : Free Stock Analysis Report
 
Acadia Healthcare Company, Inc. (ACHC) : Free Stock Analysis Report
 
Anthem, Inc. (ANTM) : Free Stock Analysis Report
 
ACADIA Pharmaceuticals Inc. (ACAD) : Free Stock Analysis Report
 
Teladoc Health, Inc. (TDOC) : Free Stock Analysis Report
 
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