Medical Stocks: Why You Should Keep An Eye On These 3 Heading Into Earnings

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Medical stocks Medpace Holdings (MEDP) and Charles River Laboratories (CRL) were making inroads toward profit-taking zones on Friday as Align Technology (ALGN) stared down a buy point.




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The medical stocks belong to the Accelerating Leaders list on MarketSmith.com — a group of 20 stocks led by the chip industry’s Ichor Holdings (ICHR). All three are also rallying this month. Charles River and Align had added roughly 15% apiece as of Friday’s close. Align had risen about 17%.

Here’s what to know about these three medical stocks.

Medical Stock Align Eyes Buy Point

Align Technology makes the teeth-straightening system known as Invisalign. After hitting a speed bump in the first half of 2020, sales and profit returned to growth beginning in the third quarter. Now, analysts polled by FactSet see massive acceleration in the first quarter.

Align will report first-quarter earnings on Wednesday. Then, analysts surveyed by FactSet call for adjusted earnings of $2.02 per share. Earnings would turn around from a rare year-earlier loss of 35 cents per share. Sales are expected to pop 48% to $816.1 million.

The earnings report comes as the medical stock stares down a buy point at 634.56 out of a cup base, according to MarketSmith.com. On Thursday, shares crept as high as 627.53 before slinking into the red. On Friday, the medical stock inched higher.

Align also leads its industry group of Medical-Products companies with a bullish Composite Rating of 97 out of a best-possible 99. This puts the medical stock in the top 3% of all stocks in terms of key growth metrics.

Shares also have a strong Relative Strength Rating of 90. This means Align ranks in the top 10% of all stocks in terms of its 12-month performance. On MarketSmith.com’s Accelerating Leaders list, Align stock ranks ninth.

Align, Charles River Top Buy Zones

Meanwhile, medical stocks Medpace and Charles River ripped past their buy points earlier this month. Both also have earnings due on Monday and May 4, respectively.

Medpace topped its buy point at 177.22 out of a consolidation on April 13. Shares were roughly 8% extended as of Friday’s close. Investors are encouraged to buy stocks when they’re no more than 5% above their entry. Savvy investors also look to snag some profits when a stock is 20%-25% extended from its buy point.

Medical stock Charles River also added to its breakout Friday. Shares climbed 1.9% on Friday and were 10% above their entry. The medical stock broke out of a flat base with a buy point at 303.89 on April 6. Despite some shakeout on April 7, shares are now definitively above their 5% chase zone.

Analysts expect Medpace earnings to jump by a third to $1.01 per share and for sales to pop 15% to $266.5 million. Charles River is expected to put up double-digit growth on the bottom and top lines with adjusted profit of $2.19 per share on $795.7 million in sales.

Both medical stocks are also leaders in the Medical-Research Equipment/Services. Medpace and Charles River are tied for third. The group is led by Iqvia Holdings (IQV), according to IBD Digital.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

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