Dj Correction To Masimo Terminates Founder Kiani As Ceo On October 29

The Cooper Companies, Inc. COO is well-poised for growth on the back of strong prospects in its CooperVision (CVI) and CooperSurgical (CSI) business segments. Acquisitions boost the company’s portfolio and buoy optimism. However, unfavorable currency movements and rising costs continue to hurt revenues and margins, respectively.

Shares of this Zacks Rank #2 (Buy) company have risen 9.7% year to date compared with the industry's 4.9% growth. The S&P 500 Index has gained 26.2% in the said time frame.

The Cooper Companies, with a market capitalization of $20.66 billion, is a global specialty medical device company.

The company’s bottom line is estimated to improve 11.4% over the next five years. Its earnings beat estimates in two of the trailing four quarters and met the mark in the other two, delivering an average surprise of 3.87%.

What's Driving COO’s Performance?

The Cooper Companies continues to lead the specialty contact lens market with its innovative product lineup, flexibility and strong relationships in key accounts. Its flagship silicone hydrogel lenses, such as MyDay and Clariti, are expected to fuel robust sales in the upcoming quarters. Additionally, its silicone hydrogel FRP lenses, Biofinity and Avaira, are projected to support revenue growth.

The lens business is set to thrive, driven by notable growth in CooperVision’s (CVI) Toric, Multifocal and single-use sphere segments, with positive trends observed across all geographic regions. Moreover, COO’s myopia management portfolio, led by the high-demand MiSight lens, is performing well. This sector is anticipated to see further gains in the coming quarters, bolstered by back-to-school promotional campaigns.

In the second quarter, the CVI segment showed solid growth, with revenues rising 9% at constant currency to $675.6 million. According to management, the strong demand for silicone hydrogel lenses contributed to this performance.

In August, COO acquired obp Surgical, a U.S.-based medical device company known for its innovative single-use surgical products. obp Surgical’s ONETRAC portfolio complements CooperSurgical’s offerings, which include INSORB, Lone Star and the Doppler Blood Flow Monitor. COO also recently launched a new inserter for single-hand placement of Paragard, simplifying the procedure for healthcare providers and enhancing Paragard’s accessibility as a contraceptive choice. During the second quarter, COO introduced new culture and transfer media, premier cryo management software called Embryo Options in Europe and launched the new FastTrack genomics testing globally.

CVI revenues are likely to be in the $673-$685 million range (organic growth of 8-10%) in the fourth quarter of fiscal 2024.

The Cooper Companies is also well-positioned to capitalize on its expanding CSI product portfolio. In the fiscal second quarter, CSI achieved constant-currency revenue growth in two core areas — fertility and office and surgical products. Sales in the office and surgical product category are expected to increase, driven by the strong growth of PARAGARD and increasing demand for stem cell storage.

Although shipping disruptions at the company’s U.S. distribution center for medical devices and fertility products, resulting from a systems upgrade in the fiscal second quarter, might have persisted in the fiscal fourth quarter, the situation is anticipated to improve.

Revenues from fertility increased 6% year over year to $129.3 million, indicating sustained solid performance. Sales of office and surgical products improved 11% to $197.9 million.

CSI revenues are expected to be in the $342-$350 million range for the fourth quarter of fiscal 2024, implying organic growth of 6-8%.

What's Weighing on the Stock?

The Cooper Companies generates a significant portion of its revenues in foreign currencies. Fluctuations in foreign exchange rates may significantly affect its overseas revenues.

Estimate Trend

The Zacks Consensus Estimate for the company's fiscal 2025 revenues is pegged at $4.19 billion, implying growth of 7.4% from the year-ago reported figure. The consensus mark for adjusted earnings per share is pinned at $4.06, indicating an improvement of 11.1% from the previous year’s recorded level.

In the past 60 days, COO’s earnings estimate for fiscal 2025 has improved 1 cent.

The Cooper Companies, Inc. Price

The Cooper Companies, Inc. price | The Cooper Companies, Inc. Quote

Other Key Picks

Some other top-ranked stocks from the medical industry are AngioDynamics ANGO, Masimo MASI and Globus Medical GMED.

AngioDynamics, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 38.2% for 2025. You can seethe complete list of today’s Zacks #1 Rank stocks here.

ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.

AngioDynamics’ shares have lost 5.5% year to date against the industry’s 6.3% growth.

Masimo, sporting a Zacks Rank of 1 at present, has an estimated growth rate of 10.4% for 2025. MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 17.10%.

Masimo’s shares have risen 43% year to date compared with the industry’s 6.3% growth.

Globus Medical, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 12.7%. GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.1%. Its shares have risen 55.2% year to date compared with the industry’s 6.3% growth.

Zacks Investment Research

Last week, the Nasdaq Composite, the S&P 500 and the Dow Jones Industrial Average climbed 5.7%, 4.7% and 4.6%, respectively. The S&P 500 briefly breached the 6,000 mark and closed with its biggest weekly percentage gain in a year, while the Dow rose above 44,000 for the first time.

Throughout the historic week, trade was dominated by the fate of the U.S. presidential elections, and a Donald Trump landslide coupled with a Republican sweep of the Congress and the Senate sent the markets soaring. Financial institutions, small-cap organizations and home-grown companies eagerly awaiting import tariff protection held sway over the markets. The service sector showed incredible growth. The Fed reduced interest rates by a further 25 basis points per expectations.

However, it remains to be seen how long this market upswing based on the “Red Sweep” sustains with actual policy moves a fair few months away.

Regardless of market conditions, we, here at Zacks, provide investors with unbiased guidance on how to beat the market.

As usual, Zacks Research guided investors over the past three months with its time-tested methodologies. Given the prevailing market uncertainty, you may want to look at our feats to prepare better for your next action.

Here are some of our key achievements:

Edenor and Kroger Surge Following Zacks Rank Upgrade

Shares of Empresa Distribuidora y Comercializadora Norte Sociedad Anonima EDN have gained 40.5% (versus the S&P 500’s 7.8% increase) since it was upgraded to a Zacks Rank #2 (Buy) on September 12.

Another stock, The Kroger Co. KR, which was also upgraded to a Zacks Rank #2 on September 12, has returned 16.3% since then.

Zacks Rank, our short-term rating system, has earnings estimate revisions at its core. Empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

A hypothetical portfolio of Zacks Rank # 1 (Strong Buy) stocks returned +14% in the year-to-date period through October 7th, 2024, vs. +22.2% for the S&P 500 index and +12.4% for the equal-weight version of the S&P 500 index.

This hypothetical portfolio returned +20.63% in 2023 vs. +24.83% for the S&P 500 index and +15% for the equal-weight S&P 500 index.

The portfolio of Zacks Rank #1 stocks is an equal-weight portfolio, while the S&P 500 index is a market-cap-weighted index that has been notably distorted by the concentrated performance of mega-cap stocks since late 2022.

The Zacks Model Portfolio - consisting of Zacks Rank #1 stocks – has outperformed the S&P index by almost 13 percentage points since 1988 (Through October 7th, 2024, the Zacks # 1 Rank stocks generated an annualized average return of +24.1% since 1988 vs. +11.2% for the S&P 500 index).

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Zacks Recommendation Upgrades Masimo and Fortinet

Shares of Masimo Corporation MASI and Fortinet, Inc. FTNT have advanced 41.2% (versus the S&P 500’s 8.5% increase) and 21.7% (versus the S&P 500’s 4.7% rise), since their Zacks Recommendation was upgraded to Outperform on September 5 and September 20, respectively.

While the Zacks Rank is our short-term rating system that is most effective over the one- to three-month holding horizon, the Zacks Recommendation aims to predict performance over the next 6 to 12 months. However, just like the Zacks Rank, the foundation for the Zacks Recommendation is trends in earnings estimate revisions.

The Zacks Recommendation classifies stocks into three groups — Outperform, Neutral and Underperform. While these recommendations are determined quantitatively, our analysts have the flexibility to override them for the 1100+ stocks they closely follow based on their better judgment of factors such as valuation, industry conditions and management effectiveness than the quantitative model.

To access our research reports with Zacks Recommendations for the 1100+ stocks we cover, click here>>>

Zacks Focus List Stocks Palantir, Axon Shoot Up

Shares of Palantir Technologies Inc. PLTR, which belongs to the Zacks Focus List, have gained 82% over the past 12 weeks. The stock was added to the Focus List on March 26, 2024. Another Focus-List holding, Axon Enterprise, Inc. AXON, which was added to the portfolio on June 6, 2020, has returned 61.4% over the past 12 weeks. The S&P 500 has advanced 12.1% over this period.

The Focus List portfolio returned +16.18% in 2024 (through October 31st) vs. +20.99% for the S&P 500 index and +13.29% for the equal-weight S&P 500 index.

The 50-stock Zacks Focus List model portfolio returned +31.44% in 2023 vs. +26.28% for the S&P 500 index and +13.61% for the equal-weight S&P 500 index. In 2022, the portfolio produced -15.2% vs. the S&P 500 index’s -17.96%.

Since 2004, the Focus List portfolio has produced an annualized return of +11.69% (through October 31st, 2024). This compares to a +10.29% annualized return for the S&P 500 index and +10.12% for the equal-weight version of the index in the same time period.

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Zacks ECAP Stocks Oracle & Fair Isaac Make Significant Gains

Oracle Corporation ORCL, a component of our Earnings Certain Admiral Portfolio (ECAP), has jumped 37.7% over the past 12 weeks. Fair Isaac Corporation FICO has followed Oracle with 33.1% returns.

The Zacks Earnings Certain Admiral Portfolio (ECAP), which consists of 30 concentrated, ultra-defensive, long-term Buy-and-Hold stocks, returned +1.97% for September 2024 vs. the S&P 500 index’s +2.14% return (IVV ETF).

For the year-to-date period (through the end of September 2024), the portfolio returned +20.62% vs. +22.1% for the S&P 500 index.

In 2023, the portfolio returned +12.17% vs. +26.28% for the S&P 500 index. The portfolio returned -4.7% in 2022 vs. the S&P 500 index’s -17.96%.

With little to no turnover and annual rebalance periodicity, ECAP seeks to minimize capital loss by holding shares of companies whose earnings streams exhibit a proven 20+ year track record of surviving recessionary periods with minimal impact on aggregate earnings growth relative to the overall S&P 500.

The ECAP and many other model portfolios are available as part of Zacks Advisor Tools, a cloud-based solution to access Zacks award-winning stock, mutual fund and ETF research. Click here to schedule a demo.

Zacks ECDP Stocks Fastenal and Paychex Outperform Peers

Fastenal Company FAST, which is part of our Earnings Certain Dividend Portfolio (ECDP), has returned 23.5% over the past 12 weeks. Another ECDP stock, Paychex, Inc. PAYX, has also climbed 18.7% over the same time frame. Of course, the inclination of investors toward quality dividend stocks to secure an income stream amid heightened market volatility contributed to this performance.

Check Fastenal's dividend history here>>>

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With an extremely low beta and a history of minimum earnings variability over the last 20+ years, this 25-stock portfolio helps significantly mitigate risk.

The Zacks Earnings Certain Dividend Portfolio (ECDP) returned +1.91% in September 2024 vs. the S&P 500 index’s +2.14% gain and the Dividend Aristocrats ETF’s (NOBL) +2.37%.

For the year-to-date period (through September 30th), the portfolio returned +15.85% vs. +22.1% for the S&P 500 index and +13.78% for NOBL.

The portfolio returned -0.9% in 2023 vs. +26.28% for the S&P 500 index and +8.11% for NOBL. The portfolio returned -2.3% in 2022 vs. -17.96% for the S&P 500 index and -8.34% for NOBL.

Click here to access this portfolio on Zacks Advisor Tools.

Zacks Top 10 Stocks Sprouts Farmers Market Delivers Solid Returns

Sprouts Farmers Market SFM, from the Zacks Top 10 Stocks for 2024, has jumped 201.7% year to date, which compares to the S&P 500 Index’s +25.9% increase.

The Top 10 portfolio returned +43.45% this year through October 31st, vs. +20.99% for the S&P 500 index and +13.29% for the equal-weight version of the index.

The Top 10 portfolio returned +25.15% in 2023 vs. +26.28% for the S&P 500 index.

Since 2012, the Top 10 portfolio has produced a cumulative return of +1,746.65% through October 31st, 2024, vs. +450.50% for the S&P 500 index. The portfolio has produced an average return of +25.5% in the period 2012 through October 31st, 2024, vs. +14.22% for the S&P 500 index and +12.49% for the equal-weight version of the index.

Zacks Investment Research

Baxter International Inc. BAX reported third-quarter 2024 adjusted earnings per share (EPS) of 80 cents, which beat the Zacks Consensus Estimate of 78 cents by 2.6%. The bottom line declined 2.4% from the year-ago quarter’s level.

On a GAAP basis, the company reported EPS of 27 cents compared with $4.93 in the prior-year quarter.

The company reported adjusted EPS from continuing operations, which include Medical Products & Therapies, Healthcare Systems & Technologies and Pharmaceuticals segments, of 49 cents compared with 43 cents in the year-ago period. Although the company reported Kidney Care business as discontinued operation, the divestment is yet to be completed.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Revenue Details

Revenues totaled $3.85 billion, up 4% on a reported basis as well as at constant currency (cc). The figure beat the Zacks Consensus Estimate by 0.3%. Revenues from continued operations totaled $2.7 billion, up 4% reportedly as well as at cc.

Shares of BAX were down 0.1% in pre-market trading despite better-than-expected quarterly results. The company’s shares have lost 5.6% year to date against the industry’s growth of 13.5%. The broader S&P 500 Index has moved up 25.8% in the same period.

Segmental Details

As part of its transformation plan announced in February 2023, Baxter established its new operating model, integrating its prior matrixed structure of nine businesses (operating across three geographic regions) into the aforementioned four verticalized global segments. The company started reporting under a new model since the third quarter of 2023.

Medical Products & Therapies

The segment includes Advanced Surgery and a new category, Infusion Therapies & Technologies. Total sales at this segment totaled $1.34 billion, up 7% year over year reportedly as well as at cc. The growth reflects strong demand across the portfolio, including the successful U.S. launch of the Novum IQ large-volume infusion pump with Dose IQ safety software.

Infusion Therapies and Technologies’ sales totaled $1.07 billion, up 7% year over year reportedly as well as at cc. Advanced Surgery category sales amounted to $272 million, up 7% year over year reportedly as well as at cc.

Healthcare Systems and Technologies

The segment includes the Front Line Care category. It also includes the Patient Support Systems and Surgical Solutions categories, which are clubbed as Care & Connectivity Solutions. Total sales in this segment were $752 million, up 1% year over year reportedly as well as at cc. The growth was led by higher demand for Care & Connectivity Solutions products in the United States, partially offset by weak Care & Connectivity Solutions sales internationally and lower sales in the U.S. Front Line Care division amid soft demand in the U.S. primary care market.

Front Line Care category sales totaled $296 million, down 2% year over year reportedly as well as at cc. Care & Connectivity Solutions category sales amounted to $456 million, up 3% year over year reportedly as well as at cc.

Pharmaceuticals

The segment presently includes two product categories — Injectables & Anesthesia and Drug Compounding. Total sales during the third quarter were $588 million, up 1% year over year reportedly as well as at cc. The growth was primarily driven by robust demand for Baxter's Drug Compounding services, partially offset by a decline in the Injectables & Anesthesia division due to the timing of certain orders shifting to the fourth quarter and supply constraints impacting international performance.

Injectables and Anesthesia category sales totaled $321 million, down 9% year over year reportedly as well as at cc. The Drug Compounding category sales amounted to $267 million, up 17% year over year reportedly and 14% at cc.

Kidney care

This segment includes BAX’s Renal Care category, which is now reported under Discontinued Operations. It also includes the Acute Therapies category. Total sales in this segment were $1.15 billion, up 4% year over year reportedly and 5% at cc. The growth was driven by positive demand and pricing for acute therapies and peritoneal dialysis products.

Baxter plans to spin off this segment, which will trade as an independent, publicly traded company under the proposed trade name of Vantive. The spin-off is expected to be completed by late 2024 or early 2025.

Other

Revenues in the segment amounted to $17 million, flat on a year-over-year basis but up 12% at cc.

Margin Analysis

Baxter reported an adjusted gross profit of $1.18 billion, up 1.3% year over year. As a percentage of revenues, the adjusted gross margin contracted 110 basis points (bps) to 43.7%.

Selling, general and administrative expenses amounted to $754 million, up 1.3% from the year-ago quarter’s figure. Research and development expenses totaled $129 million, down 3% on a year-over-year basis.

Adjusted operating income from continuing operations totaled $391 million, down 2.5% year over year. As a percentage of revenues, the adjusted operating margin declined 90 bps to 14.5%.

Baxter International Inc. Price, Consensus and EPS Surprise

Baxter International Inc. price-consensus-eps-surprise-chart | Baxter International Inc. Quote

2024 Guidance

For the fourth quarter 2024, Baxter anticipates sales to decline in the low single digits on both a reported basis and constant currency basis. Adjusted EPS is expected to be between 77 cents and 81 cents. The outlook includes the impact of Kidney Care’s discontinued operations and excludes the impact of BPS’ discontinued operations. In addition, the company’s updated guidance reflects the anticipated fourth-quarter negative impact of Hurricane Helene.

The storm hit western North Carolina on Sept. 27, flooding BAX’s North Cove manufacturing facility and causing a temporary production shutdown. The company restarted the facility last week, and new products from North Cove may be shipped to distributors and customers by the end of November. However, full restoration of the facility remains uncertain.

For full-year 2024, sales growth is expected to be 1-2% on a reported basis and 2% at cc. The Zacks Consensus Estimate for the metric is pegged at $15.22 billion, implying a year-over-year improvement of 1.8% reportedly. Adjusted EPS is projected to be in the band of $2.90-$2.91. The Zacks Consensus Estimate for the same is pegged at $2.96.

Zacks Rank and Stocks to Consider

Currently, Baxter carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the medical industry are AngioDynamics ANGO, Masimo MASI and Globus Medical GMED.

AngioDynamics, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 38.2% for 2025. You can seethe complete list of today’s Zacks #1 Rank stocks here.

ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.

AngioDynamics’ shares have lost 5.5% year to date against the industry’s 6.3% growth.

Masimo, sporting a Zacks Rank of 1 at present, has an estimated growth rate of 10.4% for 2025. MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 17.10%.

Masimo’s shares have risen 43% year to date compared with the industry’s 6.3% growth.

Globus Medical, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 12.7%. GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.1%. Its shares have risen 55.2% year to date compared with the industry’s 6.3% growth.

Zacks Investment Research

Solventum SOLV reported third-quarter 2024 adjusted earnings per share of $1.64, which beat the Zacks Consensus Estimate of $1.38 by 18.1%. The bottom line declined 42.9% year over year.

GAAP EPS in the quarter was 70 cents, down 73.7% from the year-ago quarter’s level.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Revenue Details

The company reported revenues of $2.08 billion, up 0.4% reportedly from the prior-year recorded number. Organically, sales were up 0.3%. The metric beat the Zacks Consensus Estimate by 1.5%. The growth was primarily driven by the normalization of pricing. Organic sales growth was driven by the MedSurg and Health Information Systems segments, partially offset by the Dental Solutions and Purification and Filtration segments. Forex movement had an unfavorable impact of 10 basis points (bps).

Shares of the company were up 2.6% during after-hours trading on Nov. 7, following the better-than-expected quarterly performance. The stock has risen 11% since its IPO on April 1, 2024, against the industry’s decline of 11.5%. The S&P 500 Index gained 13.3% in the same time period.

Segmental Details

MedSurg

Revenues from this segment totaled $1.18 billion, down 0.1% reportedly but up 1% organically year over year. Organic growth was driven by volumes in Tegaderm IV dressings, Medical OEM products and continued strength for single-use NPWT. This was partially offset by a decline in traditional NPWT sales.

Dental Solutions

revenues totaled $313 million, down 5.2% year over year reportedly and 3.9% organically. Soft end-market demand and the divestiture of the local anesthetic business during the third quarter of 2023 hurt the segment's sales.

HIS

Revenues from this segment amounted to $326 million, up 1.5% reportedly as well as organically on a year-over-year basis. Organic growth was driven by the continued adoption of 360 Encompass revenue cycle management, partially offset by lower revenues from performance management solutions and clinician productivity solutions.

Purification and Filtration

Revenues from this segment amounted to $238 million, down 1.5% year over year reportedly and 0.3% organically. The decline was led by a lower volume of drinking water filtration and dialysis membranes, partially offset by continued strength in bioprocessing filtration and added capacity for industrial filtration.

Margins

Adjusted gross profit was $1.19 billion, down 1.4% year over year. As a percentage of revenues, the gross margin was 57.3%, down approximately 100 bps from the prior-year quarter’s figure.

Selling, general and administrative expenses totaled $701 million, up 33.5% year over year.

Research and development expenses totaled $189 million, up 5% on a year-over-year basis.

Adjusted operating income totaled $475 million, down 11.9% year over year. As a percentage of revenues, the adjusted operating margin was 22.8%, down approximately 320 bps from the prior-year quarter’s figure. The margin contraction was due to lower gross margins, including the impact of the 3M supply agreement mark-up, and an increase in operating expenses related to public company stand-up costs and growth investments.

Financial Position

Solventum exited the third quarter with cash, cash equivalents and investments of $772 million compared with $897 million in the previous quarter.

Total assets increased to $14.75 billion from $14.58 billion in the previous quarter.

Solventum Corporation Price, Consensus and EPS Surprise

Solventum Corporation price-consensus-eps-surprise-chart | Solventum Corporation Quote

2024 Guidance

Solventum has updated its sales and adjusted earnings guidance for 2024. Solventum now expects adjusted earnings per share to be in the range of $6.50-$6.65 per share (up from the previous guided range of $6.30-$6.50).

Total sales are expected to be in the upper half of the previous guidance of 0-1% growth.

Our Take

Solventum exited the third quarter on a strong note. Both the top and bottom lines beat their respective estimates. The company’s raised outlook for 2024 earnings instills optimism. Its shares have risen 11% since its IPO on Apr. 1, 2024, against the industry’s decline of 5.1%. The S&P 500 Index has gained 24.8% in the same period.

The organic growth at SOLV’s largest segment (in terms of revenues), MedSurg, looks promising. The trend is likely to continue in the upcoming quarters on the back of continued demand for its products. However, traditional NPWT sales are likely to be under pressure. Strong adoption of 360 Encompass revenue cycle management is likely to aid sales growth for the HIS segment going forward.

However, soft end-market demand is likely to continue as a headwind for the Dental Solutions segment. Meanwhile, the contraction in gross and operating margins raises concern. The company’s updated outlook, however, implies that margins may improve in the fourth quarter.

SOLV is undergoing a three-phase restructuring program after its separation from 3M in 2023, focusing on debt reduction, portfolio optimization and operational efficiency, with Phase 1 expected to be completed within 12-24 months. These initiatives look promising for the company’s long-term prospects.

Zacks Rank and Key Picks

Solventum currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the medical industry are AngioDynamics ANGO, Masimo MASI and Globus Medical GMED.

AngioDynamics, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 38.2% for 2025. You can seethe complete list of today’s Zacks #1 Rank stocks here.

ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.

AngioDynamics’ shares have lost 5.5% year to date against the industry’s 6.3% growth.

Masimo, sporting a Zacks Rank of 1 at present, has an estimated growth rate of 10.4% for 2025. MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 17.10%.

Masimo’s shares have risen 43% year to date compared with the industry’s 6.3% growth.

Globus Medical, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 12.7%. GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.1%. Its shares have risen 55.2% year to date compared with the industry’s 6.3% growth.

Zacks Investment Research

McKesson Corporation MCK reported second-quarter fiscal 2025 adjusted earnings per share (EPS) of $7.07, which beat the Zacks Consensus Estimate of $6.89 by 2.6%. The bottom line also improved 13.5% on a year-over-year basis.

GAAP EPS was $1.87, down 62% from the year-ago quarter’s level.

Revenue Details

Revenues of $93.65 billion beat the Zacks Consensus Estimate by 4.7%. The top line increased 21.3% year over year, primarily driven by the upside from continued momentum in the Pharmaceutical segment, especially for specialty products and GLP-1 medications. MCK also recorded increased prescription volumes during the quarter.

Higher contributions from the Prescription Technology Solutions and Medical-Surgical Solutions segments also aided the top line. International markets also recorded promising growth during the quarter.

Shares of MCK were up 4.7% during after-hours trading on Nov. 6, likely due to strong top and bottom-line performances. The company’s shares have risen 18.8% year to date compared with the industry’s 2.9% growth. The S&P 500 Index has gained 24.7% in the same time frame.

Q2 Segmental Analysis

Revenues in the U.S. Pharmaceutical segment totaled $85.7 billion, up 23% year over year. Per management, the upside was primarily driven by increased prescription volumes from specialty products, retail national account customers and GLP-1 medications.

The U.S. Pharmaceutical and Specialty Solutions segment reported an adjusted operating profit of $902 million, up 11% from the prior-year quarter’s level. This was due to an increase in the distribution of specialty products to providers and health systems.

In the International segment, revenues amounted to $3.7 billion, up 7% year over year. This was due to higher pharmaceutical distribution volumes in the Canadian business.

Adjusted operating profit at the segment totaled $100 million, up 12% from the year-ago reported figure.

Revenues in the Medical-Surgical Solutions segment totaled $2.9 billion, up 4% year over year. Sales were primarily driven by higher volumes of specialty pharmaceuticals, including vaccines in the primary care channel.

The Medical-Surgical segment reported an adjusted operating profit of $243 million, down 4% year over year. This decline was due to lower volumes, customer mix, and product demand shifts across the primary care sites, partially offset by growth in the extended care business.

Revenues in the Prescription Technology Solutions segment totaled $1.3 billion, up 11% year over year. This uptick was due to growth in the technology services business and higher contributions from the third-party logistics businesses.

The segment reported an adjusted operating profit of $218 million, up 4% year over year, driven by growth in affordability and access solutions, partially offset by investments to support future growth.

Margins

Gross profit in the reported quarter was $3.25 billion, up 5.8% on a year-over-year basis. The figure represented 3.5% of net revenues, down nearly 50 basis points (bps) year over year.

The company reported an operating income of $578 million, down 39.2% from the year-ago quarter’s figure, primarily due to higher cost of sales. Operating margin was 0.6%, down almost 60 bps year over year.

Financial Update

Cash and cash equivalents totaled $2.51 billion compared with $2.3 billion a year ago.

Cumulative net cash provided by operating activities amounted to $720 million against cumulative net cash used in operating activities of $87 million in the year-earlier period.

Fiscal 2025 Guidance

McKesson raised its adjusted EPS guidance for fiscal 2025. It now expects adjusted EPS to be in the range of $32.40-$33.00 (previously $31.75-$32.55), which represents growth of 18-20% from the prior-year level. The Zacks Consensus Estimate for the same is pegged at $31.92. Revenues are expected to grow 15-17% from the prior-year figure.

McKesson Corporation Price, Consensus and EPS Surprise

McKesson Corporation price-consensus-eps-surprise-chart | McKesson Corporation Quote

Summing Up

McKesson exited the second quarter of fiscal 2025 on a strong note, with earnings and revenues beating estimates. Revenues reflect strong momentum in the U.S. pharmaceutical segment, driven by robust demand across its offerings. The company added a large distribution customer to its portfolio during the fiscal first quarter that strongly benefited the segment in the reported quarter.

Moreover, an improved Medical-Surgical business amid recovery in the primary care channel looks promising. The company has started initiatives to boost its operational efficiency and optimize cost, however, it will likely take a while to get reflected in the company’s performance.

Meanwhile, the decline in operating margin, reflecting higher costs and expenses, is likely to continue in the next quarter.

Zacks Rank and Stocks to Consider

McKesson currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the medical industry are AngioDynamics ANGO, Masimo MASI and Globus Medical GMED.

AngioDynamics, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 38.2% for 2025. You can seethe complete list of today’s Zacks #1 Rank stocks here.

ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.

AngioDynamics’ shares have lost 19.2% year to date against the industry’s 6.1% growth.

Masimo, sporting a Zacks Rank of 1 at present, has an estimated growth rate of 10.4% for 2025. MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 17.10%.

Masimo’s shares have risen 5.3% year to date compared with the industry’s 5.1% growth.

Globus Medical, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 12.7%. GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.1%. Its shares have risen 38.7% year to date compared with the industry’s 6.1% growth.

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