QGEN Collaborates With McGill University Centre: Stock to Gain?

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

Labcorp LH has announced enhancements to Global Trial Connect, a suite of digital, data and operational solutions aimed at increasing the speed of clinical trials at the heart of clinical research-investigator sites. Launched in June of this year, it is available to all present Labcorp Central Laboratory clients.

Labcorp Global Trial Connect incorporates complementary digital and data solutions that help accelerate clinical study startup, maintain study momentum and increase study throughput.

Predicting LH Stock Movement Following the News

After the announcement on Nov. 12, shares of Labcorp edged up 0.1%, finishing at $244.26 yesterday. The company continues the growth momentum in central laboratory business and diagnostics, backed by strong volume and core performance and by advancing in science, technology and innovation. Accordingly, we expect the LH stock to remain positive surrounding this development.

Labcorp currently has a market capitalization of $20.4 billion. According to the Zacks Consensus Estimate, the company’s 2024 earnings are expected to improve by 7.2% on a 0.7% increase in revenues. It has delivered an earnings beat of 2.87%, on average, in the trailing four quarters.

New Enhancements in Labcorp Global Trial Connect

The latest enhancements to Global Trial Connect aim to reduce investigator site burden and improve sponsor oversight with a single point of access via the Labcorp Investigator Site and Sponsor Portals, respectively. One such update, Sample Tracking, facilitates timelier decision-making with earlier visibility into a sample’s chain of custody from registration through receipt by the company’s laboratories. It also enables access to critical details to proactively manage the process with customizable views and reports.

Electronic Requisition eliminates paper forms and reduces queries by up to 70%, based on early studies where it has been deployed, with fully digital workflows and operational instructions for easier access, filing and reference. This is available across a wide variety of workflows, including those with complex sampling such as anatomic pathology, histology and home health visits.

According to Ryan Baehl, the vice president of global operations of Labcorp’s Central Laboratory Services, integration of these features will empower earlier decision-making and provide actionable analytics that helps sites and sponsors reduce queries and improve protocol compliance. This is the latest update in the company’s roadmap to address delivery efficiency across the clinical trial lifecycle and redefine its global laboratory services.

Industry Prospects Favoring LH

Per a research report, theglobal clinical laboratory service market is valued at $233.24 billion in 2023 and forecast to grow at a compound annual rate of 3.5% through 2030.

The market growth is driven by the increasing burden of chronic diseases and demand for early diagnostic tests, as well as rapid advancements in data management and sample preparation. The growing adoption of laboratory automation systems is expected to favor the market for clinical lab services.

Labcorp’s Recent Developments

Last month, Labcorp expanded its portfolio of sexually transmitted infection testing options with the First to Know Syphilis Test. The company will serve as the exclusive distributor of tests to providers in healthcare settings nationwide through an agreement with over-the-counter and point-of-care diagnostic test developer NOWDiagnostics.

LH Stock Price Performance

In the past year, Labcorp shares have risen 17.4% compared to the industry’s 11.9% growth.

LH’s Zacks Rank and Key Picks

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

Some better-ranked stocks in the broader medical space are Boston Scientific BSX, Haemonetics HAE and Globus Medical GMED, 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 risen 64.3% in the past year. Estimates for the company’s 2024 earnings per share have jumped 2.5% to $2.46 in the past 30 days. BSX’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 8.29%. In the last reported quarter, it posted an earnings surprise of 8.62%.

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 Globus Medical’s 2024 earnings per share have increased 0.4% to $2.95 in the past 30 days. Shares of the company have surged 81.1% in the past year compared to the industry’s 23.4% growth. GMED’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 17.65%. In the last reported quarter, it delivered an earnings surprise of 27.69%.

Zacks Investment Research

Quest Diagnostics Inc.’s DGX robust Advanced Diagnostics offering is poised to drive its growth in the upcoming quarters. Strength in the company’s core business is highly encouraging. Additionally, a strong focus on cost discipline bodes well for the stock. However, mounting debt and lower COVID-19 revenues are concerns for Quest Diagnostics’ operations.

In the past year, this Zacks Rank #2 (Buy) stock has increased 20.8% compared with the industry’s 29.4% growth and 33.7% growth of the S&P 500 composite.

The renowned provider of diagnostic information services has a market capitalization of $17.88 million. Quest Diagnostics has an earnings yield of 5.55% compared with the industry’s yield of 3.45%. The company’s earnings surpassed estimates in all the trailing four quarters, delivering an average surprise of 4.92%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

DGX’s Tailwinds

Strong Potential of Advanced Diagnostics: Quest Diagnostics’ highly specialized Advanced Diagnostics portfolio is growing, driving a favorable test mix and growth in test per requisition for the company. Within brain health, AD-Detect blood-based Alzheimer’s disease testing has been the key driver, while growth in women’s health is driven by prenatal and hereditary genetic testing. Robust testing demand in genital tract infections, which includes several STIs, is also observed.

In the cardio-metabolic health space, there is growing interest in several biomarkers that improve early detection of cardiovascular and metabolic diseases like diabetes and kidney disease. The acquisition of Haystack Oncology has strategically placed Quest Diagnostics in the higher-growth clinical area of ctDNA (Circulating tumor DNA) solid-tumor MRD (minimal residual disease) testing. The Haystack MRD test is set to be available nationally to providers in the fourth quarter of 2024.

Growth Momentum in the Base Business Continues: The third quarter of 2024 marked another strong base business growth for Physician Lab Services, driven by new customer wins and expanded business due to increased utilization of the company’s Advanced Diagnostics. Acquisitions also contributed to the channel’s growth. Added to this, Quest Diagnostics delivered strong volume and revenue growth from its Medicare Advantage plans.

In Hospital Lab Services, Quest Diagnostics is posting growth above historical levels, supported by dynamics that lead to strong continued demand for reference testing. Further, Quest Diagnostics’ strong consumer focus is helping it to capture growing opportunities in consumer-initiated testing and demand for expanded access to basic health care. The questhealth.com platform reported 40% growth in total revenues.

A Strategic Imperative to Drive Operational Excellence: As part of its broader strategy to drive operational improvements across the business, Quest Diagnostics strategically deploys automation and AI to improve quality, service, efficiency and the workforce experience. The company’s multi-year cost excellence program, Invigorate, has consistently delivered 3% annual cost savings and productivity enhancements, acting as a shield against inflationary pressures such as rising labor and benefit costs and reimbursement challenges.

In the third quarter, the company completed the build-out of full end-to-end automation for its core routine tests at its Lenexa, KS, laboratory. This makes it the third fully automated lab in Quest Diagnostics’ national network. It is also piloting automated specimen accessioning in its Clifton lab to increase productivity in specimen processing and improve quality.

Factors Weighing on DGX

Escalating Debt Level: The company’s solvency level remains a concern. At the end of the third quarter of 2024, long-term debt in the balance sheet was $5.65 billion, while the cash and cash equivalent balance was only $764 million. The current portion of the debt stood much higher at $603 million.

Runoff of COVID-19 Testing Revenues Drag the Top Line: The transition away from COVID-19 testing presented challenges for the company in 2023. Revenues from testing volumes have continued to nosedive, plunging nearly 85% last year and affecting some key metrics’ performance. Quest Diagnostics’ 2024 outlook indicates a $175 million decline in COVID-19 revenues, partially offsetting the growth from the base business.

DGX Stock Estimate Trend

The Zacks Consensus Estimate for Quest Diagnostics’ 2024 earnings per share (EPS) has remained constant at $8.89 in the past 30 days.

The consensus estimate for the company’s 2024 revenues is pegged at $9.79 billion. This suggests 5.8% growth from the year-ago reported number.

Other Key Picks

Some other top-ranked stocks in the broader medical space are Haemonetics HAE, Boston Scientific (BSX) and Penumbra PEN.

Haemonetics has an earnings yield of 5.02% compared to the industry’s 1.18% yield. Haemonetics’ earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 19.39%. Its shares have risen 20.3% against the industry’s 7.3% decline in the past year.

HAE carries Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Boston Scientific, carrying a Zacks Rank #2 at present, has a long-term estimated earnings growth rate of 13.8%. Shares of the company have rallied 64.3% compared to the industry’s 26.5% gain. BSX’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 2.82%.

Penumbra, carrying a Zacks Rank #2 at present, has an estimated earnings growth rate of 33.5% for 2024, compared with the industry’s 15.9%. Shares of Penumbra have risen 9.9% compared to the industry’s 23.4% growth over the past year. PEN’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 10.54%.

Zacks Investment Research

Veeva Systems Inc. VEEV is well-poised for growth in the coming quarters, courtesy of its strong product portfolio. The optimism, led by a solid second-quarter fiscal 2025 performance and strategic deals, is expected to contribute further. Stiff competition and rising operational costs persist.

This Zacks Rank #3 (Hold) company’s shares have risen 22.9% in the year-to-date period compared with 30.2% growth of the industry. The S&P 500 composite has risen 26.3% during the said time frame.

The renowned provider of cloud-based software applications and data solutions for the life sciences industry has a market capitalization of $38.36 billion. The company projects 24.6% growth for the next five years and expects to maintain its strong performance in the future. It delivered a trailing four-quarter average earnings surprise of 5.41%.