Why Investors Need to Take Advantage of These 2 Medical Stocks Now

Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.

Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive earnings surprises.

Hunting for 'earnings whispers' or companies poised to beat their quarterly earnings estimates is a somewhat common practice. But that doesn't make it easy. One way that has been proven to work is by using the Zacks Earnings ESP tool.

The Zacks Earnings ESP, Explained

The Zacks Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information.

Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.

In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 28.3% annual returns on average, according to our 10 year backtest.

Stocks with a #3 (Hold) ranking, which is most stocks covered at 60%, are expected to perform in-line with the broader market. But stocks that fall into the #2 (Buy) and #1 (Strong Buy) ranking, or the top 15% and top 5% of stocks, respectively, should outperform the market. Strong Buy stocks should outperform more than any other rank.

Should You Consider Pfizer?

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. Pfizer (PFE) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $0.59 a share, just one day from its upcoming earnings release on August 5, 2025.

Pfizer's Earnings ESP sits at +1.43%, which, as explained above, is calculated by taking the percentage difference between the $0.59 Most Accurate Estimate and the Zacks Consensus Estimate of $0.58. PFE is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

PFE is part of a big group of Medical stocks that boast a positive ESP, and investors may want to take a look at Organon (OGN) as well.

Organon is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on August 5, 2025. OGN's Most Accurate Estimate sits at $0.99 a share one day from its next earnings release.

Organon's Earnings ESP figure currently stands at +5.32% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.94.

PFE and OGN's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.

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 >>

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This article originally published on Zacks Investment Research (zacks.com).

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