Watch These 3 MedTech Stocks This Earnings Season: Beat or Miss?

The first-quarter 2025 earnings season is underway, with a number of top MedTech companies already releasing their numbers. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

According to the latest Earnings Preview report, the broader Medical sector will deliver both top and bottom-line growth, driven by breakthrough innovations such as AI/Machine Learning (ML)-enabled technologies and increased availability of products and services in both established and high-growth markets. Many companies are likely to have tapped into the growing demand for patient-centric healthcare solutions, generating new revenue opportunities. However, the sector may have faced challenges in the first quarter due to ongoing macroeconomic uncertainties stemming from political, economic and policy changes. Additionally, a stronger U.S. dollar may have created headwinds for domestic medical device companies by making their products costlier overseas. 

Going by the broader Medical sector’s scorecard, 15% of the companies in the Medical sector, constituting 33.8% of the sector’s market capitalization, reported their results until April 23. Earnings improved 4.7% year over year on 9.4% higher revenues. Of the total index members, 66.7% reported earnings and revenue beats.

Overall, first-quarter 2025 earnings of the Medical sector are expected to improve 35% on 7.8% growth in revenues. This compares with the 2024 fourth-quarter earnings increase of 13.4% on revenue growth of 9.4%.

Key industry players like CVS Health CVS, Hologic HOLX and IDEXX Laboratories IDXX are set to report their quarterly results tomorrow.

Factors Likely to Influence MedTech Stocks' Q1 Results

Replicating the broader market trend, MedTech or the Zacks-defined Medical Products companies are anticipated to report collective sales growth for the first quarter. Cutting-edge innovation is likely to have remained at the forefront, with the rise of AI-enabled diagnostics and instruments in specialized areas like oncology, neuroscience, cardiovascular and more. These advanced solutions may have helped companies capture a larger market share due to the significant advantages they offer in improving patient outcomes. Additionally, the growing adoption of safe, equitable personalized solutions is likely to have led to strong revenue growth in the first quarter.

To further access, medical companies have been increasingly targeting fast-growing markets and expanding into new, underpenetrated regions. Those involved in clinical laboratory services are likely to have gained from broader test menus to cater to the demand for early disease detection. Strategic collaborations and acquisitions also appear to have been a major growth driver in the first quarter, diversifying the existing product lines and unlocking new growth avenues. Also, the implementation of cost-efficiency programs, through enterprise-wide restructuring and footprint measures, is expected to impact quarterly results.

That said, macro trends such as an aging population, growing healthcare awareness and increasing access to better health options have been fueling even more innovation and investment in this space. These factors are likely to have positively impacted first-quarter results.

Yet, the industry faces persistent challenges from a heightened geopolitical environment, supply-chain disruptions driving up costs for labor and raw materials, and a shortage of freight and healthcare workers. Changes in U.S. trade policies, tariffs and the reaction of other countries are likely to have weighed heavily on MedTech companies, creating profitability pressures in the first quarter.

MedTech Stocks to Watch

CVS Health: The company’s Healthcare Benefits segment is expected to report better results in the first quarter of 2025, following a challenging fourth quarter marked by elevated medical cost trends and an adjusted operating loss. Despite ongoing regulatory scrutiny, the Caremark pharmacy benefit manager (PBM) business is likely to have continued to play a vital role in offsetting the rising cost of branded drugs. Additionally, both same-store sales and same-store prescription volumes are expected to have increased year over year in the Pharmacy & Consumer Wellness segment, benefiting CVS’ top line.

(Read more: CVS Soars 53% in Q1: Time to Buy the Stock Ahead of Earnings Release?)

The Zacks Consensus Estimate for first-quarter 2025 revenues is pegged at $92.95 billion, suggesting an improvement of 5.1% from the prior-year quarter’s reported number.

The consensus mark for adjusted earnings stands at $1.67 per share, implying a 27.5% rise from the year-ago quarter’s reported figure.

During the first quarter, the company’s shares rose 50.9% compared with the industry’s 2.5% growth.

Per our proven model, a stock with the combination of a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates. This is exactly the case here, as you can see below. You can see the complete list of today’s Zacks #1 Rank stocks here.

CVS has an Earnings ESP of +2.83% and carries a Zacks Rank of 3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

CVS Health Corporation Price and EPS Surprise

CVS Health Corporation price-eps-surprise | CVS Health Corporation Quote

Hologic: In the second quarter of fiscal 2025, Hologic may have faced a couple of challenges, including heightened macroeconomic volatilities, such as the impact of new U.S. administration policy changes, supply-chain constraints, alongside cost inflation in critical materials and components. Additionally, a stronger U.S. dollar is expected to have impacted its results. Nonetheless, the Diagnostics division’s performance is likely to have been led by its core Molecular business. International momentum may have driven the Surgical segment’s growth.  

(Read more: Hologic Set to Report Q2 Earnings: Buy, Sell or Hold the Stock?)

The Zacks Consensus Estimate for second-quarter earnings suggests a 1.6% decrease year over year to $1.02 per share. The Zacks Consensus Estimate for second-quarter revenues currently stands at $1.00 billion, indicating a 1.6% fall compared to the year-ago period.

During the fiscal second quarter, the stock declined 14.3% compared with the industry’s 6.2% drop.

HOLX has an Earnings ESP of 0.00% and carries a Zacks Rank #3.

Hologic, Inc. Price and EPS Surprise

Hologic, Inc. price-eps-surprise | Hologic, Inc. Quote

IDEXX: In the first quarter of 2025, the company is likely to deliver robust Companion Animal Diagnostics’ (CAG) recurring revenues, supported by improvements in average global net prices and international organic gains. Both domestic and overseas performances are expected to have boosted organic gains in IDEXX VetLab consumables. Additionally, the veterinary software’s organic growth might have been led by robust recurring revenues, indicating the benefits of ongoing momentum in cloud-based software placements. Apart from CAG, the Water and Livestock, Poultry and Dairy (LPD) segments are also likely to have witnessed growth.

(Read more: IDXX Gears Up for Q1 Earnings: What to Expect From the Stock?)

For the first quarter, the Zacks Consensus Estimate for IDEXX’s revenues is pegged at $1.02 billion, indicating an increase of 5.4% from the year-ago reported figure. The Zacks Consensus Estimate for the company’s second-quarter revenues suggests 3.9% year-over-year growth to $2.92.

Meanwhile, during the first quarter, the company's shares rose 1.6% compared to the industry’s 6.2% decline.

IDXX has an Earnings ESP of -2.62% and carries a Zacks Rank #3.

IDEXX Laboratories, Inc. Price and EPS Surprise

IDEXX Laboratories, Inc. price-eps-surprise | IDEXX Laboratories, Inc. Quote

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

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

Zacks Investment Research