As the first-quarter earnings season progresses, this week will be crucial for many companies in the medical sector.
Per the latest Earnings Preview report, the Medical sector is expected to register solid revenue and earnings growth. These gains are likely to have been backed by the increasing demand for medical products and services. Additionally, advancements in artificial intelligence (AI), robotics and data analytics must have improved disease diagnosis, treatment selection and clinical laboratory testing, driving quarterly revenue growth. Meanwhile, challenges like global geopolitical uncertainties, primarily in the form of retaliatory tariff issues, supply challenges and healthcare labor shortages, are expected to have put pressure on the industry’s first-quarter financial performance.
Going by the broader Medical sector’s scorecard, 15.0% of the companies in the sector, constituting 33.8% of its market capitalization, reported earnings till April 23. Earnings improved 4.7% year over year on 9.4% higher revenues. Of the total index members, 66.7% reported a beat on earnings and revenues.
Overall, first-quarter 2025 earnings of the Medical sector are expected to improve 35% on 7.8% revenue growth. This compares with the fourth-quarter 2024 earnings increase of 13.4% on revenue growth of 9.4%.
Major industry players like Align Technology, Inc. ALGN, Tandem Diabetes Care, Inc. TNDM and ICON plc ICLR are set to announce results tomorrow.
Factors Driving the Q1 MedTech Earnings Season
The medical sector is experiencing robust growth due to the rising prevalence of chronic diseases, such as diabetes and cancer, as well as an aging population requiring advanced medical interventions. Additionally, demand for medical devices, such as wearable health monitors and minimally invasive surgical instruments, has increased due to greater awareness and accessibility of diagnostic and surgical procedures.
Major industry players, including Abbott and Boston Scientific, reported strong revenue growth, with notable gains in their specialized device segments. Abbott’s diabetes care and vascular division gains of 19.8% and 5.7%, respectively. Meanwhile, Boston Scientific’s Cardiology division saw 31.2% organic growth, reinforcing the sector’s resilience. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar).
Yet, the industry continues to be in a difficult position due to a tough geopolitical environment, supply-chain disruptions that result in high labor and raw material costs, and a shortage of freight and healthcare workers. Also, the MedTech players are expected to have faced challenges from the current reciprocal tariff rates and the current policy changes by the U.S. administration.
MedTech Stocks to Watch
Align Technology: The company is likely to have witnessed strength in Clear Aligner volumes for teens and growing kids, reflecting growth across regions, especially from Invisalign First in the APAC and EMEA regions in the first quarter. Align Technology’s Systems & Services business is projected to have witnessed growth on the back of high scanner Average Selling Prices, increased scanner volumes and non-system revenues driven by iTero Lumina wand upgrades, increased scanner rentals and certified pre-owned leasing programs.
(Read more: ALGN Gears Up for Q1 Earnings: What Lies Ahead for the Stock?)
The Zacks Consensus Estimate for first-quarter revenues is pegged at $975.3 million, which suggests a decline of 2.2% from the year-ago reported figure. The Zacks Consensus Estimate for earnings is pinned at $1.99 per share, indicating a 7% decline from the year-ago recorded actuals.
During the first quarter, the company’s shares fell 23.6% against the industry’s 1.2% growth.
Per our proven model, a stock with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates. This is not the case here, as you can see below. You can see the complete list of today’s Zacks #1 Rank stocks here.
ALGN has an Earnings ESP of -3.08% and a Zacks Rank of 3 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Align Technology, Inc. Price and EPS Surprise
Align Technology, Inc. Price and EPS Surprise
Align Technology, Inc. price-eps-surprise | Align Technology, Inc. Quote
Tandem Diabetes Care: The company posted record quarterly sales figures for the fourth quarter of 2024, driven by a strong double-digit increase in pump shipments. We expect this trend to have sustained in first-quarter 2025 as well. The Tandem Mobi launch and strong retention of customers through renewal purchases are likely to have boosted TNDM’s top line in the to-be-reported quarter.
During the first quarter, Tandem Diabetes inked a multi-year collaboration agreement with the University of Virginia Center for Diabetes Technology and made its Control-IQ+ technology commercially available in the United States. We expect these developments to have contributed to the company’s top-line performance.
The Zacks Consensus Estimate for first-quarter loss per share is pinned at 60 cents compared with the year-ago period’s loss of 63 cents. The Zacks Consensus Estimate for first-quarter revenues is currently pegged at $220.2 million, indicating a 14.9% improvement from the year-ago period’s level.
During the first quarter, the stock fell 46.4% compared with the industry’s 4.8% decline.
TNDM has an Earnings ESP of 0.00% and a Zacks Rank #3 at present.
Tandem Diabetes Care, Inc. Price and EPS Surprise
Tandem Diabetes Care, Inc. Price and EPS Surprise
Tandem Diabetes Care, Inc. price-eps-surprise | Tandem Diabetes Care, Inc. Quote
ICON: In the previous quarter, the company’s earnings and revenues declined year over year. However, ICON experienced a sequential increase in gross business wins, indicating a positive but volatile demand environment in both the large pharma and biotech divisions. This trend is likely to be reflected in first-quarter results.
ICON’s strategic partnerships and R&D efforts are expected to have driven growth in the first quarter of 2025. In January, ICON announced expansion of its portfolio of artificial intelligence (AI) tools to provide efficiency across clinical trial process. Additionally, ICON collaborated with Mural Health Technologies, Inc., to utilize the latter’s participant management and payments platform, Mural Link. We expect these developments to have had a positive impact on the company’s top line.
The Zacks Consensus Estimate for first-quarter revenues is pegged at $2.02 billion, which suggests a decline of 3.4% from the year-ago reported figure. The Zacks Consensus Estimate for earnings is pinned at $3.09 per share, indicating an 11% decline from the year-ago recorded actuals.
During the first quarter, the stock fell 14.6% against the industry’s 3.9% growth.
ICLR has an Earnings ESP of -1.18% and a Zacks Rank #4 (Sell).
ICON PLC Price and EPS Surprise
ICON PLC Price and EPS Surprise
ICON PLC price-eps-surprise | ICON PLC Quote
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