6 Health Care Stocks to Gain on Earnings

NEW YORK (TheStreet) -- The following companies from the health care industry will release their quarterly earnings over the next two days. These stocks have upsides ranging from 2% to 23% and buy, hold ratings of 46% and 49%, respectively. On expected positive quarterly earnings, these stocks are seen accumulating gains subsequent to the release.

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As per statistics, the Healthcare Sector SPDR Fund ( XLV) recorded 7.3% increase during the June quarter compared to a 0.5% drop registered by the S&P 500.

Further, during the second quarter of 2011, merger and acquisition deal activity in the health care industry surged with $73.5 billion spent to finance 243 deals, as per a report by Irving Levin Associates. This indicates 44% escalation from the uptick seen in the first quarter of 2011 and a 61% increase from the second quarter of 2010.

The stocks are stacked based on their earnings release date.
6. Edwards Lifesciences ( EW) is a global player in products and technologies designed to treat advanced cardiovascular disease. It mainly focuses on developing therapies that treat structural heart disease and critically ill patients. The company has operations in the U.S., Europe, Japan and its products and technologies are divided into four areas: Heart Valve Therapy, Critical Care, Cardiac Surgery Systems and Vascular. The company will report its second quarter 2011 earnings on July 21 after the market.

Net income for second quarter 2011 is pegged at $60.02 million or 50 cents per share, versus $55.00 million or 46 cents per share in the year-ago quarter, as per analysts polled by Bloomberg. For the quarter, sales are expected to rise by 16% to $425.22 million from $365.20 million in same quarter prior year. Operating profit for the period is estimated at $79.24 million against $73.60 million in the year-ago quarter.

Looking ahead to 2011, net sales are estimated to range from $1.66 to $1.74 billion. Meanwhile, net income is likely to grow by 11% to 13% from a recorded net profit of $219 million in 2010.

Of the 29 analysts covering the stock, 38% recommend a buy and 59% suggest a hold. Analysts polled by Bloomberg foresee the stock gaining an average 8.3% to $94.83 in the upcoming 12 months.

5. Cepheid ( CPHD) a molecular diagnostics company, engages in developing, manufacturing and marketing fully-integrated systems for testing in the clinical market, as well as for application in legacy industrial, biothreat and partner markets. Cepheid will report its second quarter 2011 results on July 21 after market.

Analysts polled by Bloomberg expect Cepheid to record sales of $60.94 million for the second quarter of 2011 compared to $49.64 million in same quarter prior year. Net loss for the quarter is seen narrowing to $0.26 million, or 2-cents per share, from $1.80 million, or 3 cents per share, in the second quarter of 2010. Gross margin for the quarter is likely to expand to 55.53% from 49.21% in year ago period. EBITDA for the second quarter is seen rising by 34% to $2.1 million.

Of the 19 analysts covering the stock, 47% suggest a buy and the remaining rate a hold. There are no sell ratings on the stock. Analysts polled by Bloomberg foresee the stock gaining an average 3.3% to $31.70 in the upcoming 12 months.

4. Molina Healthcare ( MOH) engages in providing Medicaid-related solutions to meet the healthcare needs of low-income families and individuals, and assists state agencies in the administration of the Medicaid program. The company focuses on government-sponsored healthcare programs, including Health Plans, Molina Medicaid Solutions, and the smaller direct delivery line of business. The company will release its second quarter 2011 results on July 21 after market hours.

Analysts' consensus estimates foresee Molina's second quarter 2011 net income increasing to $16.99 million, or 37 cents per share, from $10.58 million, or 27 cents per share, in the year-ago quarter. Sales are seen surging by 18% from the comparable quarter prior year to $1.15 billion from $976.68 million. Return on assets for the quarter is pegged at 4.30% compared to 1.97% in the year-ago quarter. Operating profit is estimated to go up by 44%.

In April, the company's board of directors authorized a 3-for-2 stock split of the company common stock, to be effected in the form of a stock dividend of one share of the company's common stock for every two shares outstanding. Trading of the company's shares on a split-adjusted basis began on May 23, 2011.

Of the 14 analysts covering the stock, 21% recommend a buy and 71% suggest a hold. Analysts polled by Bloomberg foresee the stock gaining an average 6.0% to $28.07 in the upcoming 12 months.

3. Merit Medical Systems ( MMSI) designs, develops, manufactures and markets single-use medical products for interventional and diagnostic procedures. The company's business is divided into four segments: cardiology, radiology, gastroenterology and pulmonary. Merit is scheduled to release its second quarter 2011 results on July 21 after market hours.

Analysts polled by Bloomberg foresee the company reporting second-quarter net income of $7.49 million or 20 cents per share, compared to $6.41 million or 18 cents per share in the same quarter prior year. Sales are seen rising by 19% to $89.40 million from $74.95 million in the year-ago quarter. Gross margin is likely to expand to 46.75% from 43.31% in the year-ago quarter. Operating profit for the quarter could increase by 29% to $11.31 million.

The company recently closed its public offering of 5.52 million shares of common stock, including 720,000 shares issued as a result of the underwriters' exercise of their over-allotment option. Net proceeds of the issue totaled $87.6 million, excluding underwriting discounts, commissions and estimated offering expenses.

Of the nine analysts covering the stock, 56% recommend a buy and the rest rate a hold. There are no sell ratings on the stock. Analysts polled by Bloomberg foresee the stock gaining an average 22.6% to $21.67 in the upcoming 12 months.

2. IDEXX Laboratories ( IDXX) develops, manufactures and distributes products and provides services for the companion animal veterinary, livestock and poultry, water testing and dairy markets. Broadly, the company operates in two business segments: Companion Animal Group, and Livestock and Poultry Diagnostics. Besides, IDEXX sells products for the dairy and human point-of-care medical diagnostics market. The company will release its second quarter 2011 results on July 22.

Analysts polled by Bloomberg expect IDEXX to record second-quarter net income of $42.54 million or 72 cents per share, versus $37.19 million or 62 cents per share in the same quarter prior year. Sales are expected to rise by 10% to $309.33 million from $281.48 million earlier. Operating profit is seen increasing by 14% to $62.67 million, while EBITDA is pegged 11% higher at $73.75 million.

Recently, the company announced plans to build a $60 million corporate headquarters through restricting activities at a nearby quarry, allowing the company to accommodate almost 700 new workers. Initially, the project would start with the construction of a $30 million, 107,000-square-foot building that will include offices for 300 persons, a fitness center and a food service area.

Of the 12 analysts covering the stock, 33% recommend a buy and 58% suggest a hold. Analysts polled by Bloomberg foresee the stock gaining an average 2.4% to $81.50 in the upcoming 12 months.

1. Omnicell ( OMCL) provides automated solutions for hospital medication and supply management. It designs solutions to enable healthcare facilities to acquire, manage, dispense and administer medication and medical-surgical supplies. Besides, it is focused on improving patient safety, reducing medication errors, improving workflow, and operating efficiency. The company will release its second quarter 2011 results on July 22.

Analysts polled by Bloomberg expect Omnicell to record second-quarter net income of $4.51 million or 13 cents per share, versus $4.06 million or 12 cents per share in the same quarter prior year. Sales are seen soaring by 9% to $59.87 million from $54.69 million earlier. Gross margin is likely to expand to 54.77% from 52.78%, while EBITDA is estimated to rise to $7.64 million from $5.67 million in the year-ago period. Operating profit is seen rising by 5% during the quarter.

Recently, it was known that president and CEO of the company sold 6,936 shares on July 13 at an average price of $17 per share.

Of the nine analysts covering the stock, 78% recommend a buy and 11% suggest a hold. Analysts polled by Bloomberg foresee the stock gaining an average 5.5% to $17.50 in the upcoming 12 months.

>>To see these stocks in action, visit the 6 Health Care Stocks to Gain on Earnings portfolio on Stockpickr.

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