Investor concerns about weaker order growth in China as the country’s economy slows and the impact of popular weight-loss drugs on medical devices and procedures have dragged on stock prices across the sector in recent weeks.
Here are four companies to watch as they report third-quarter earnings in the week ahead:
1. GE HealthCare
The General Electric healthcare spinoff, which will report third-quarter results on Tuesday, is increasingly focused on incorporating artificial intelligence into its imaging devices to enhance quality and support provider productivity. The company is working to streamline some of its operations and reduce costs after the spinoff, and last quarter raised its full-year revenue and earnings targets.
Analysts are watching for whether the slowdown in China will hit GE HealthCare in the second half of the year. “GE Healthcare's exposure in China coupled with tougher comps on Orders in 2H23 makes us nervous,” BTIG analyst Ryan Zimmerman wrote earlier this month in a report previewing the third quarter.
2. ZimVie
The maker of spine and dental products was spun out from Zimmer Biomet last year. ZimVie announced this spring that it would cut 5% of its workforce in a bid to boost efficiency and profitability. The company reported better-than-expected revenue and earnings in the second quarter, according to J.P. Morgan analyst Robbie Marcus.
“Following a better than expected start to 2023, we’re hopeful ZimVie can continue this trend with a beat and raise in 3Q. … That being said, it likely will take several more quarters of consistent outperformance and a return (or better visibility) to positive Y/Y revenue growth before we consider getting more constructive on shares,” Marcus wrote Sunday in a report to clients.
ZimVie reports its latest results Wednesday afternoon.
3. Stryker
Positive momentum from new product launches, operating margin improvements and the company’s Mako robotics system have supported Stryker’s growth. Needham analyst Mike Matson expects the company to beat analysts’ consensus revenue and earnings forecasts in the third quarter. But in a note to clients Monday, he cautioned that the orthopedics market could be losing some steam.
“We believe orthopedic markets should return to their respective pre-pandemic trajectories between late-2023 and late-2024, which should cause Stryker's revenue growth to slow,” Matson wrote.
Stryker is due to report its third-quarter results on Thursday.
4. Insulet
Marcus is looking for Insulet, maker of the Omnipod insulin pump, to report another quarter of record new patient growth when the company releases results on Thursday. “After three strong quarters of Omnipod 5 new patient starts, and very good pharmacy script data throughout the summer months, we expect another healthy beat in 3Q,” Marcus said. “We think investors are looking for ~31-32%+ US Omnipod growth.”
The company recently announced that it received clearance from the Food and Drug Administration for its Omnipod 5 iPhone application, allowing iPhone users to control their insulin pumps from their smartphones. The company said it expects a full market release next year.
