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How to Boost Your Portfolio with Top Medical Stocks Set to Beat Earnings

Zacks Equity Research
·2-min read

Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.

The earnings figure itself is key, but a beat or miss on the bottom line can sometimes be just as, if not more, important. Therefore, investors should consider paying close attention to these earnings surprises, as a big beat can help a stock climb even higher.

2 Stocks to Add to Your Watchlist

The Zacks Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate. The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction.

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Now that we understand what the ESP is and how beneficial it can be, let's dive into a stock that currently fits the bill. TransMedics (TMDX) earns a Zacks Rank #1 right now and its Most Accurate Estimate sits at -$0.02 a share, just 26 days from its upcoming earnings release on May 6, 2024.

By taking the percentage difference between the -$0.02 Most Accurate Estimate and the -$0.05 Zacks Consensus Estimate, TransMedics has an Earnings ESP of 60%.

TMDX is part of a big group of Medical stocks that boast a positive ESP, and investors may want to take a look at Johnson & Johnson (JNJ) as well.

Johnson & Johnson is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on April 16, 2024. JNJ's Most Accurate Estimate sits at $2.65 a share six days from its next earnings release.

For Johnson & Johnson, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.63 is 0.6%.

Because both stocks hold a positive Earnings ESP, TMDX and JNJ could potentially post earnings beats in their next reports.

Find Stocks to Buy or Sell Before They're Reported

Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

TransMedics Group, Inc. (TMDX) : Free Stock Analysis Report

Johnson & Johnson (JNJ) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research