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Can Icon (ICLR) Sustain its Surprise Streak in Q3 Earnings?


Icon Plc ICLR is set to report third-quarter 2016 earnings results on Oct 20. Last quarter, the company posted earnings of $1.14 per share, a penny above the Zacks Consensus Estimate.

We note that Icon surpassed the Zacks Consensus Estimate in the last four quarters, by an average of 0.92%. Let’s see how things are shaping up for this quarter.

Factors at Play

We believe Icon’s performance will benefit from its continued investments in ICONIK, ADDPLAN and Firecrest platforms. For the global contract research organization, further upside can be expected from its rising market share. Its plus points are a growing backlog and a strong funds’ flow from mid-sized companies that are expected to drive results.

However, downside may come from pricing pressure, austerity measures and health care reforms. Also, foreign exchange movements are not favoring Icon’s results. The strong U.S. dollar against the Japanese yen and euro may impede performance in the third quarter.

Overall, the company’s activities during the July–September period were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the third quarter declined to 18 cents from 19 cents per share over the last 30 days.

ICON PLC Price and EPS Surprise

ICON PLC Price and EPS Surprise | ICON PLC Quote

Earnings Whispers

Our proven model does not conclusively show that Icon is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or at least 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Icon currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate currently stand at $1.18.

Zacks Rank: Icon has a Zacks Rank #2 (Buy) which increases the possibility of an earnings beat. Though a favorable Zacks Rank makes the case stronger for an earnings beat, a 0.00% ESP leaves our surprise prediction inconclusive.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a few stocks worth considering that, as per our model, have the right combination of elements to post an earnings beat this quarter:

WellCare Health Plans WCG with an Earnings ESP of +5.41% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Achillion Pharmaceuticals, Inc. ACHN with an Earnings ESP of +6.25% and a Zacks Rank #2.

Ascendis Pharma ASND with an Earnings ESP of +15.49% and a Zacks Rank #2.

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