IART Stock to Gain From New Study Findings on DuraSeal Dural Sealant

Wednesday, November 13, 2024

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including UnitedHealth Group Inc. (UNH), Bank of America Corp. (BAC) and SAP SE (SAP). These research reports have been hand-picked from roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

UnitedHealth’s shares have outperformed the Zacks Medical - HMOs industry over the past two years (+19.7% vs. +12.8%). The Zacks analyst believes that strong market position, new deals, renewed agreements, expansion of service offerings, government business have aided the company.

However, membership in its global business continues to be a concern. High operating costs due to rising medical expenses are hurting margins.

(You can read the full research report on UnitedHealth here >>>)

Bank of America’s shares have underperformed the Zacks Financial – Investment Bank industry over the past year (+56.9% vs. +64.7%). The Zacks analyst believes that high funding costs, the challenging macroeconomic environment weighing on the investment banking business, and operating costs remaining high due to continued investments in franchise have ailed.

Yet, the company’s plans to open financial centers in new and existing markets and improve digital capabilities should support the top line.

(You can read the full research report on Bank of America here >>>)

Shares of SAP have outperformed the Zacks Computer - Software industry over the last six months (+23.6% vs. +9.0%). Per the Zacks analyst, amid a volatile macro environment, the company is making significant strides in Business AI initiatives, with innovations like SAP Knowledge Graph. Synergies from WalkMe’s acquisition and ongoing restructuring efforts also bode well. Cloud ERP Suite sales have also driven revenue.

However, softness in the Software license and support business segment remains a headwind.

(You can read the full research report on SAP here >>>)

Other noteworthy reports we are featuring today include Boston Scientific Corp. (BSX), Sanofi (SNY) and Sony Group Corp. (SONY).

Mark Vickery

Senior Editor

Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>

Today's Must Read

Solid Top Line & Strong Cash Flows Drive UnitedHealth (UNH)

Branch Openings, Lower Rates Aid BofA (BAC), Fee Income Ails

Solid Demand in Cloud & AI Innovations Drive SAP's Prospects

Featured Reports

Dupixent to Remain Sanofi's (SNY) Key Top-Line Driver

The Zacks analyst expects Dupixent to remain Sanofi's key top-line driver as it enjoys strong demand trends. Sanofi has also accelerated its pipeline this year and has been active on the M&A front

Investments & Customer Additions Aid Southwest Gas (SWX)

Per the Zacks analyst, Southwest Gas' strategic investment plans will support system improvements and pipe replacement programs. Consistent customer additions will further boost its results.

Sunoco's (SUN) Robust Motor Fuel Distribution Network Aids

Per the Zacks analyst, Sunoco's long-term contracts with over 10,000 convenience stores across the U.S. should ensure stable earnings. However, its significant reliance on debt raises concerns.

Solid Non-Gaming Business Aid Wynn Resorts (WYNN) Prospects

Per the Zacks analyst, Wynn Resorts is likely to gain from solid non-gaming business and strategic capital investments. Also, focus on development projects like the event center bodes well.

Strength in Games & Network, Music Segments Benefits SONY

Per the Zacks analyst, Sony is gaining from strong performance of its Games & Network and Music segments. Weak macro conditions, lower hardware sales and rising costs are concerns.

Robust EP Gains Aid Boston Scientific (BSX), Cost Woes Worry

Per the Zacks analyst, the stellar performance of Boston Scientific's Electrophysiology (EP) business is led by FARAPULSE PFA system. Yet, rising expenses from macroeconomic headwinds raise concerns.

Solid Top Line Aids American Financial (AFG), Cat Loss Ails

Per the Zacks analyst, American Financial growing revenues driven by higher net investment income, net earned premiums have led to significant growth. However, exposure to cat loss is a concern.

New Upgrades

Strong SMB clientele Aids BILL Holdings (BILL) Prospects

Per the Zacks analyst, BILL is benefiting from an expanding small and medium business (SMB) clientele, as well as a diversified business model.

End-Market Strength & Diversification Aids Amphenol (APH)

Per the Zacks analyst, Amphenol is benefiting from commercial air, military, industrial and automotive end-market demand. Diversified business model also lowers volatility of individual geographies.

Acquisitions & Restructuring Initiatives Aid UBS Group (UBS)

Per the Zacks analyst, UBS Group's emphasis on business restructuring to strengthen its financials is promising, while opportunistic acquisitions are expected to drive long-term growth.

New Downgrades

Decreased Demand Paper Related Products Hurts Xerox (XRX)

Per the Zacks analyst, Xerox is grappling with decreased demand for paper-related systems and products. Rising competition is concerning.

Weak Demand, Low Steel Margins Ail Commercial Metals (CMC)

Per the Zacks analyst, sluggish demand in Europe is putting pressure on Commercial Metals' results. Lower steel product margins also remain worrisome.

Soft Demand to Hurt Capri Holdings (CPRI) Top Line

Per the Zacks analysts, softness in demand for luxury fashion items is likely to hurt Capri Holdings top line. The company is seeing sluggishness across its brands.

Zacks Investment Research

Investors seek growth stocks to capitalize on above-average growth in financials that help these securities grab the market's attention and produce exceptional returns. But finding a great growth stock is not easy at all.

By their very nature, these stocks carry above-average risk and volatility. Moreover, if a company's growth story is over or nearing its end, betting on it could lead to significant loss.

However, the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects, makes it pretty easy to find cutting-edge growth stocks.

Globus Medical (GMED) is one such stock that our proprietary system currently recommends. The company not only has a favorable Growth Score, but also carries a top Zacks Rank.

Studies have shown that stocks with the best growth features consistently outperform the market. And returns are even better for stocks that possess the combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy).

Here are three of the most important factors that make the stock of this medical device company a great growth pick right now.

Earnings Growth

Earnings growth is arguably the most important factor, as stocks exhibiting exceptionally surging profit levels tend to attract the attention of most investors. For growth investors, double-digit earnings growth is highly preferable, as it is often perceived as an indication of strong prospects (and stock price gains) for the company under consideration.

While the historical EPS growth rate for Globus Medical is 14.2%, investors should actually focus on the projected growth. The company's EPS is expected to grow 27.3% this year, crushing the industry average, which calls for EPS growth of 17.1%.

Cash Flow Growth

While cash is the lifeblood of any business, higher-than-average cash flow growth is more important and beneficial for growth-oriented companies than for mature companies. That's because, growth in cash flow enables these companies to expand their businesses without depending on expensive outside funds.

Right now, year-over-year cash flow growth for Globus Medical is 72.4%, which is higher than many of its peers. In fact, the rate compares to the industry average of -4.9%.

While investors should actually consider the current cash flow growth, it's worth taking a look at the historical rate too for putting the current reading into proper perspective. The company's annualized cash flow growth rate has been 18.2% over the past 3-5 years versus the industry average of 5.4%.

Promising Earnings Estimate Revisions

Superiority of a stock in terms of the metrics outlined above can be further validated by looking at the trend in earnings estimate revisions. A positive trend is of course favorable here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

There have been upward revisions in current-year earnings estimates for Globus Medical. The Zacks Consensus Estimate for the current year has surged 4.6% over the past month.

Bottom Line

While the overall earnings estimate revisions have made Globus Medical a Zacks Rank #2 stock, it has earned itself a Growth Score of B based on a number of factors, including the ones discussed above.

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

This combination positions Globus Medical well for outperformance, so growth investors may want to bet on it.

Zacks Investment Research

QIAGEN N.V. QGEN recently collaborated with the McGill University Centre for Microbiome Research to support microbiome research activities and outcomes. The three-year partnership will further advance microbiome sciences and focus on key areas such as DNA extraction from low microbial biomass samples and anaerobic culturing protocols.

The latest partnership aims to strengthen QIAGEN’s microbiome research efforts while supporting innovation at the McGill Centre.

QGEN Stock’s Trend Following the News

Subsequent to the news, the share price of QGEN remained unchanged at $43.23 in after-market trading yesterday. The company is gaining synergies from its collaboration in the microbiome research space. Earlier this year, QGEN partnered with Penn State University in the United States to create a shared research and education facility for the fast-developing microbiome sciences. Henceforth, we expect the latest partnership with McGill Centre to motivate market sentiment in favor of QGEN in the coming days.

QIAGEN currently has a market capitalization of $9.83 billion. The company delivered an average earnings surprise of 2.6% in the trailing four quarters.

Details of the Collaboration

The company will support the McGill Centre with reagents for research across a variety of microbiology and genomic processing workflows and contribute to joint research projects, which will demonstrate the suitability of QIAGEN products for microbiome science. The collaboration will also enable the McGill Centre to train the next generation of scientists better and make microbiome research accessible to a wider range of scientific domains.

QIAGEN products will be used in the McGill Centre's experimental platforms. The centre will also function as a beta-testing site for developing new QIAGEN products for microbiome applications, and refining and optimizing these for broader applications in the scientific community.

The center aims to integrate and synergize microbiome research activities by offering services through two distinct yet complementary experimental platforms — Gnotobiotic Animal Research and Microbial Services.

Significance of QIAGEN’s Collaboration

Microbiome research aims to explore the relationships between microorganisms such as bacteria, fungi and viruses, and their hosts. It can help better understand the microbiome’s impact on health, disease, and microbial ecological processes to develop novel diagnostic and therapeutic strategies.

The latest collaboration is expected to strengthen QIAGEN’s presence in microbiome research space across North America, which represents a $1.8 billion market. It will also help gain a deeper understanding of the needs of the scientific community for studying the function of vast microbial ecosystems. The collaboration aims to enhance QIAGEN’s ability to develop new microbiome solutions based on customer feedback and support the scientific community in uncovering new insights into the microbiome’s impact on health and disease.

Industry Prospects Favor QIAGEN

According to a Research Nester report, the human microbiome market is projected to grow by more than $117.3 billion by 2037, experiencing a compound annual growth rate of 32.2% during 2024-2037. Key factors influencing the market growth include rising cases of lifestyle-related diseases like diabetes and increasing investment in biological drug development across the globe.

QIAGEN’s Recent Development

QIAGEN recently achieved FDA clearance for its QIAstat-Dx Respiratory Panel Mini test for clinical use. This is the second QIAstat-Dx respiratory panel to receive a U.S. regulatory nod this year.

QGEN Stock Price Performance

Year to date, QGEN’s shares have risen 6% compared with the industry’s 10.7% growth.

QGEN’s Zacks Rank and Key Picks

The company currently carries a Zacks Rank #3 (Buy).

Some better-ranked stocks in the broader medical space are Boston Scientific BSX, Globus Medical GMED and ResMed RMD, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Boston Scientific’s shares have surged 58.3% in the past year. Estimates for the company’s earnings per share (EPS) have jumped 2.5% to $2.46 for 2024 and 0.4% to $2.72 for 2025 in the past 30 days. BSX’s earnings surpassed estimates in each of the trailing four quarters, delivering an average beat of 8.3%. In the last reported quarter, it posted an earnings surprise of 8.6%.

Estimates for Globus Medical’s 2024 EPS have remained constant at $2.84 in the past 30 days. Shares of the company have surged 61% in the past year compared with the industry’s growth of 24.7%. GMED’s earnings surpassed estimates in each of the trailing four quarters, the average beat being 12.1%. In the last reported quarter, it delivered an earnings surprise of 10.3%.

Estimates for ResMed’s fiscal 2025 EPS have risen 2.2% to $9.22 in the past 30 days. Shares of the company have surged 58.8% in the past year compared with the industry’s 29.2% growth. RMD’s earnings surpassed estimates in each of the trailing four quarters, the average beat being 6.4%. In the last reported quarter, it delivered an earnings surprise of 8.4%.

Zacks Investment Research

Globus Medical GMED continues to gain from surging demand for its Musculoskeletal Solutions products. Meanwhile, the company is expanding in the overseas markets through the expansion of direct and distributors sales force. The stock carries a Zacks Rank #2 (Buy) currently.

Factors Driving GMED's Shares

Globus Medical merged its business with NuVasive. The combined company has formed a global musculoskeletal company focused on rapid innovation, addressing unmet clinical needs and improving offerings to surgeons and patients. The combination capitalizes on GMED’s complementary commercial organization and should allow the company to accelerate its globalization strategies to increase customer reach and strengthen surgeon relationships.

The combined company is working on bringing best-in-class technologies to create a differentiated and comprehensive procedural solution offering as part of its approach to address unmet clinical needs and support surgeons and patients. Earlier management noted that the combined company expects to generate a total of $170 million over three years due to the merger with NuVasive, with 40% being realized in year one, 70% by the end of year two and 100% in year three.

In the third quarter, the combined trauma and NuVasive specialty orthopedic (NSO) business delivered 99% growth. This was driven by continued strong performance, market penetration of the base trauma business and the fast uptake of NSO.

Globus Medical is gaining market share in the musculoskeletal solutions space, banking on the strong performance of its implantable devices, biologics, accessories and unique surgical instruments used in an expansive range of spinal, orthopedic and neurosurgical procedures. The company is particularly seeing notable gains across its product portfolio in expandables, biologics, MIS screws, 3D printed implants and cervical offerings.

Globus Medical, Inc. Price

Globus Medical, Inc. price | Globus Medical, Inc. Quote

In the third quarter, Globus Medical’s proforma musculoskeletal revenues (assuming NuVasive revenues in the year-ago period) improved 5.4%, making it the fourth consecutive quarter of pro forma musculoskeletal revenue growth. The growth was driven primarily by strong contributions from the company’s U.S. and international spine businesses. Third-quarter Enabling Technologies revenues grew 39% year over year, driven by increased sales within the U.S. market across the EGPS and E3D products.

During the third quarter of 2024, the company launched four new products. Among the launches, the Excelsius navigation hub pairs navigational accuracy with patient safety features. It is currently the only freehand navigation system on the market to offer the versatility of three distinct imaging workflows. Then, there is the Actify 3D Total Knee system that pairs cementless reconstruction with operative efficiency and anatomic fit. Actify 3D complements the Excelsius Flexrobot with the TKA total knee Arthroplasty application that received FDA clearance in late second-quarter 2024. Within trauma, the company launched the CAPTIVATE SOLA headless compression screw system that provides a fast and efficient solution for fracture repair, bone reconstruction, joint fusion, osteotomy and arthrodesis.

Over the past three months, shares of GMED have gained 24.3% compared with the industry’s 0.2% growth. The company is benefiting from NuVasive business integration. With its consistent focus on strategic market expansion and new product launches, we expect the stock to retain its bullish momentum in the coming days.

Concerning Factors for GMED

Like other industry players, Globus Medical is currently grappling with negative trends in the global economy, including interest rate fluctuations, increases in inflation and financial market volatility. These factors are affecting the company’s operations and financial performance. The increasing geopolitical complexities across the globe, in particular, have resulted in a significant rise in raw material and freight costs for the company. In the third quarter, the company incurred a 99.8% surge in the cost of goods sold. The macroeconomic factors, along with the rising wage and raw material costs, are also leading to a significant escalation in the company’s operating expenses. SG&A expenses in the reported quarter were up 54.1% from the year-ago quarter.

Further, the presence of a large number of players made the musculoskeletal devices market intensely competitive. The orthopedic industry, in particular, is highly competitive with the presence of more prominent players like Zimmer Biomet, Stryker, Johnson & Johnson’s DePuy, Smith & Nephew and Medtronic. Globus Medical needs to constantly introduce or acquire new products to withstand the competitive pressure and maintain its market share.

Other Key Picks

Some other top-ranked stocks in the broader medical space are Boston Scientific BSX, Haemonetics HAE and ResMed RMD, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Boston Scientific’s shares have surged 58.3% in the past year. Estimates for the company’s earnings per share (EPS) have jumped 2.5% to $2.46 for 2024 and 0.4% to $2.72 for 2025 in the past 30 days. BSX’s earnings surpassed estimates in each of the trailing four quarters, delivering an average beat of 8.3%. In the last reported quarter, it posted an earnings surprise of 8.6%.

Estimates for Haemonetics’ fiscal 2025 earnings per share have jumped 0.4% to $4.59 in the past 30 days. Shares of the company have increased 4.5% in the past year compared with the industry’s growth of 26.5%. HAE’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 2.82%. In the last reported quarter, it delivered an earnings surprise of 2.75%.

Estimates for ResMed’s fiscal 2025 EPS have risen 2.2% to $9.22 in the past 30 days. Shares of the company have surged 58.8% in the past year compared with the industry’s 29.2% growth. RMD’s earnings surpassed estimates in each of the trailing four quarters, with the average beat being 6.4%. In the last reported quarter, it delivered an earnings surprise of 8.4%.

Zacks Investment Research

Alcon, Inc. ALC delivered core earnings per share (EPS) of 81 cents for the third quarter of 2024, up 22.7% from the year-ago quarter’s figure (up 25% at the constant exchange rate or CER). The figure topped the Zacks Consensus Estimate by 12.5%.

Alcon reports “core” results based on non-IFRS (International Financial Reporting Standards) measures. In the third quarter, the company’s EPS was 53 cents, up 29% (up 32% at CER) year over year.

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

Revenues in Detail

Alcon’s net sales to third parties in the quarter under review were $2.43 billion, which missed the Zacks Consensus Estimate by 0.8%. However, the top line increased by 5.6% from the year-ago quarter’s levels (up 6% at CER).

Shares of Alcon rose 3.6% in after hour-trading yesterday following the earnings release.

Quarter in Detail

Alcon reports operations through two segments — Surgical (comprising Implantables, Consumables and Equipment/Other) and Vision Care (comprising Contact Lenses and Ocular Health).

Surgical

In the third quarter of 2024, Surgical sales amounted to $1.34 billion, up 6% on a reported and CER basis year over year. Our model projected the segment’s growth to be 6.1% at CER versus the prior year.

Within this, net sales in Implantables increased 5% at CER, led by strong sales of advanced technology intraocular lenses in international markets, including a benefit from volume-based procurement in China, partially offset by slower market conditions in the United States. Our model projected 7.2% year-over-year growth at CER.

Alcon Price, Consensus and EPS Surprise

Alcon price-consensus-eps-surprise-chart | Alcon Quote

Consumables increased 6% at CER, driven by vitreoretinal consumables in international markets, cataract consumables and price increases. Our model’s projection was an increase of 5.5% at CER.

Equipment/Other was up 1% at CER from the prior-year quarter’s levels. Our model had forecast a decline of 1.1% at CER.

Vision Care

The segment reported total sales of $1.1 billion, up 7% year over year on both a reported and CER basis. Our model’s projection was 7.9% growth at CER.

Net sales of Contact Lenses increased 8% year over year at CER, driven by product innovation, including toric multifocal modalities and price increases. This surpassed our model’s projected growth of 10% at CER year over year.

Ocular Health sales increased 4% year over year at CER, primarily driven by the portfolio of eye drops, including continued strength from the Systane family of artificial tears. However, this was partially offset by declines in contact lens care in international markets. Our model forecast was 5.9% at CER.

Margins

The cost of net sales in the third quarter was $1.06 billion, up 4.1% year over year. The core gross profit rose 6.9% to $1.37 billion in the reported quarter. Meanwhile, the core gross margin expanded 64 basis points (bps) to 56.3% in the third quarter of 2024.

SG&A expenses increased 1.4% year over year, while R&D expenses rose 11.9% year over year. The core operating margin expanded 152 bps in the third quarter to 13.8%.

Financial Position

Alcon exited the third quarter of 2024 with cash and cash equivalents of $1.57 billion compared with $1.37 billion at the end of the second quarter.

The cumulative net cash flow from operating activities at the end of the third quarter was $1.62 billion compared with $937 million in the year-ago period. Free cash flow totaled $1.29 million at the end of the third quarter of 2024 compared with $592 million in the comparable 2023 months.

2024 Outlook

Alcon updated its financial outlook for 2024.

The company now anticipates 2024 net sales in the range of $9.80-$9.90 billion (compared with the earlier range of $9.90-$10.10 billion), indicating growth of 6%-7% (earlier 7%-9%) at CER from 2023. The Zacks Consensus Estimate for ALC’s revenues is pegged at $9.89 billion.

Core EPS for the full year is expected in the range of $3.00-$3.05 ($3.00-$3.10 earlier). This suggests growth of 15%-17% (earlier 15%-18%) at CER from the 2023 levels. The Zacks Consensus Estimate for Alcon’s 2024 earnings is currently pegged at $3.02 per share.

Our Take

Alcon posted mixed third-quarter results, with better-than-expected earnings but lower-than-estimated revenues. On a positive note, the top line improved on a year-over-year basis. The performance was driven by robust demand for the company’s innovative products, balanced geographic footprint and strong execution by the team. Growth in the Vision Care segment underscores the strength of contact lenses. The expansion of both margins in the quarter is encouraging, too.

Alcon is preparing for product launches that are set to drive its next phase of growth in 2025 and beyond.

Zacks Rank and Other Key Picks

Alcon currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader medical space that have announced quarterly results are Quest Diagnostics Incorporated DGX, ResMed Inc. RMD and Boston Scientific Corporation BSX.

Quest Diagnostics, carrying a Zacks Rank of 2, reported third-quarter 2024 adjusted earnings per share (EPS) of $2.30, beating the Zacks Consensus Estimate by 1.8%. Revenues of $2.49 billion outpaced the consensus mark by 3.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Quest Diagnostics has a long-term estimated growth rate of 6.5%. DGX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.4%.

ResMed reported first-quarter fiscal 2025 adjusted EPS of $2.20, beating the Zacks Consensus Estimate by 8.4%. Revenues of $1.22 billion surpassed the Zacks Consensus Estimate by 2.9%. It currently carries a Zacks Rank #2.

ResMed has a long-term estimated growth rate of 14.8%. RMD’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 6.4%.

Boston Scientific reported third-quarter 2024 adjusted EPS of 63 cents, beating the Zacks Consensus Estimate by 8.6%. Revenues of $4.21 billion surpassed the Zacks Consensus Estimate by 4.4%. It currently carries a Zacks Rank #2.

Boston Scientific has a long-term estimated growth rate of 13.8%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.3%.

Zacks Investment Research