8 Health Care Buys Ahead of Earnings

NEW YORK ( TheStreet) - Pfizer ( PFE), Watson Pharmaceuticals ( WPI) and Mednax ( MD) are among the eight stocks reporting quarterly earnings next week.

Analysts' estimate these stocks, with minimum market capitalization of $1 billion, have upside potential ranging from 9% to 34%. On average, 66% of analysts have buy ratings on these stocks, and another 33% have hold ratings.

The stocks are listed below in order of their earnings release dates and upside potential.

8. Pfizer ( PFE) is a research-based global pharmaceutical company operating in two segments: biopharmaceutical and diversified. The company's diversified portfolio includes human and animal health products as well as nutritional products. Pfizer will announce third-quarter results on Nov. 1.

For 2011 third quarter, net income is estimated at $4.35 billion on sales of $16.48 billion, vs. net income of $4.37 billion recorded on $16.17 billion sales for the same period prior year, as per analysts polled by Bloomberg. Earnings per share are forecast at 56 cents for the quarter, against 54 cents in 2010 third quarter. Gross margin for the period is pegged at 80.20% as compared to 75.91% in the year-earlier period.

The company's board has approved its fourth-quarter dividend of 20 cents on common stock payable Dec. 6.

Of the 28 analysts covering the stock, 71% recommend a buy and 21% a hold. Analysts polled by Bloomberg expect the stock to gain an average 15.1% to $22.84 from current levels over the next 12 months.

7. Watson Pharmaceuticals ( WPI) is an integrated global pharmaceutical company dealing in generic and brand pharmaceutical products. The company manages its business into three operating segments: Generics, Brands and Distribution. Watson will announce third-quarter results Nov. 1.

Net income for the third quarter of 2011 is estimated at $132.54 million on sales of $1.09 billion, higher than net income of $105.80 million recorded on $882.4 million sales for the same period in 2010, as per analysts polled by Bloomberg. For the quarter, earnings per share are forecast at $1.05 cents, vs. 85 cents registered in 2010 third quarter. Meanwhile, a multifold increase in operating profit is likely at $223.45 million, rising from $34.50 million in the year-ago period.

Of the 22 analysts covering the stock, 59% recommend a buy and the rest rate a hold. There are no sell ratings on the stock. Analysts polled by Bloomberg expect the stock to gain an average 12.1% to $78.00 from current levels over the next 12 months.

6. Henry Schein ( HSIC) distributes health care products and services to health care practitioners, government and other institutions. It serves in two segments: health care distribution and technology. HSIC will announce third-quarter results on Nov. 1.

Net income for the third quarter of 2011 is estimated at $93.86 billion, or $1.01 per share, compared to $87.89 million, or 94 cents per share, in the year-ago quarter. Sales are forecast at $2.07 billion, up 9% from $1.89 billion in the third quarter of 2010. Gross margin for the quarter is seen increasing to 28.70% from 28.38% in the year-earlier quarter. Cash flow per share is seen at $1.36, compared to 53 cents in 2010 third quarter.

Of the 16 analysts covering the stock, 50% recommend a buy and 44% suggest a hold. Analysts polled by Bloomberg expect the stock to gain an average 8.6% to $75.64 from current levels over the next 12 months.

5. Mednax ( MD) engages in providing services in pediatrics and anesthesia care. The company has a national network of 1,675 affiliated physicians, including 968 physicians who provide neonatal care in 33 states in the U.S. and Puerto Rico. Mednax will announce third-quarter results on Nov 1.

Net income for the third quarter of 2011 is estimated to increase by 15% to $57.92 million with sales surging 14% to $400.43 million, as per analysts polled by Bloomberg. Earnings per share are forecast at $1.18 for the quarter, as compared to $1.06 in 2010 third quarter. Operating profit for the quarter is seen increasing 17% to $94.93 million.

Of the 17 analysts covering the stock, 82% recommend a buy and the rest suggest a hold. There are no sell ratings on the stock. Analysts polled by Bloomberg expect the stock to gain almost 15.3% to $77.31 from current levels over the next 12 months.

4. Myriad Genetics ( MYGN) engages in developing and marketing molecular diagnostic and therapeutic products related to predictive medicine, personalized medicine and prognostic medical tests. The company will announce its first quarter 2012 results on Nov. 1.

Net income for the first quarter of 2012 is estimated at $23.89 million on sales of $106.37 million, vs. $22.54 million recorded on $91.86 million sales for the same period in 2010, as per analysts polled by Bloomberg. Earnings per share are forecast at 28 cents for the quarter, up 15% from the year-ago quarter. Operating profit is seen rising 6% to $37.88 million.

Of the 23 analysts covering the stock, 48% recommend a buy and the rest suggest a hold. There are no sell ratings on the stock. Analysts polled by Bloomberg expect the stock to gain almost 15.3% to $25.08 from current levels over the next 12 months.

3. Jazz Pharmaceuticals ( JAZZ) is a specialty pharmaceutical company with two products: Xyrem and Luvox CR. Jazz will announce third-quarter results on Nov. 1.

For the third quarter of 2011, net income is seen increasing to $40.60 million from $17.25 million in the year-ago quarter. Earnings per share are estimated at 92 cents, up from 41 cents in the prior-year period. Sales are seen rising 61% to $72.18 million from $44.75 million in the same quarter prior year. Gross margin is likely to expand to 94.73% from 93.09% in the year-ago period.

Of the six analysts covering the stock, four recommend a buy and two suggest a hold. Analysts polled by Bloomberg expect the stock to gain almost 34.2% to $53.50 from current levels over the next 12 months.

2. Covance ( CVD) is a drug development services company for the pharmaceutical, biotechnology and medical device industries. It also provides laboratory-testing services to the chemical, agrochemical and food industries. Covance will announce third-quarter results on Nov. 2.

For the third quarter of 2011, analysts polled by Bloomberg expect net income of $43.21 million on sales of $526.8 million, compared to a net loss of $32.64 million recorded on $513.3 million sales for the same period in 2010. Earnings per share are forecast at 71 cents for the quarter, a 41% increase from 50 cents in 2010 third quarter.

Gross margin is expected at 31.24%, compared to 27.14% in the earlier-year period. Return on equity is seen increasing to 10.75% from 5.67% for the same period, while return on assets is seen rising to 8.10% from $4.13% earlier.

Of the 20 analysts covering the stock, 55% recommend a buy and the rest suggest a hold. There are no sell ratings on the stock. On average, analysts polled by Bloomberg expect the stock to gain almost 22.6% to $64.39 from current levels over the next 12 months.

1. DaVita ( DVA) provides dialysis services in the U.S. for patients suffering from chronic kidney failure. The company provides in-patient hemodialysis services in approximately 750 hospitals, excluding physician services. DaVita will announce third-quarter results on Nov. 3.

For the third quarter of 2011, net income is seen at $137.75 million, vs. $119.39 million recorded in the year-ago quarter. Also, for the same period, net sales are seen growing to $1.79 billion from $1.65 billion. Earnings per share for the quarter are expected to increase to $1.44 from $1.15 per share in the year-ago period. Gross margin is seen expanding to 33.03% from 30.59% earlier. Operating profit is at $2.34 billion, up 12%. Cash flow per share is pegged at $2.05 for the quarter, up 30%.

Of the 17 analysts covering the stock, 76% recommend a buy and the rest suggest a hold. There are no sell ratings on the stock. On an average, analysts polled by Bloomberg expect the stock to gain almost 19.5% to $86.08 from current levels over the next 12 months.

>>To see these stocks in action, visit the 8 Health Care Buys Ahead of Earnings portfolio on Stockpickr.

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