OrthoPediatrics (KIDS) Reports First Quarter Loss, Highest Revenue Estimate

OrthoPediatrics (KIDS) came out with a quarterly loss of $0.29 per share, in line with the Zacks Consensus Estimate. For comparison, a year earlier the loss was $0.30 per share. These numbers have been adjusted for one-off items.

A quarter ago, it was expected that this orthopedic device maker would post a loss of $0.22 per share when it actually produced a loss of $0.32, delivering a surprise of -45.45%.

Over the last four quarters, the company has surpassed consensus EPS estimates only once.

OrthoPediatrics, which belongs to the Zacks Medical – Instruments industry, posted revenues of $31.59 million for the quarter ended March 2023, surpassing the Zacks Consensus Estimate by 7%. For comparison, revenues from the previous year amounted to $23.42 million. The company has topped consensus revenue estimates twice over the last four quarters.

The sustainability of the immediate share price movement based on the recently-released numbers and future earnings expectations will largely depend on management’s commentary on the earnings call.

OrthoPediatrics shares are up about 27% year-to-date compared to the S&P 500 Index’s gain of 8.6%.

What’s next for orthopedics?

Although OrthoPediatrics has outperformed the market this year, investors are wondering what’s next for its stock?

There are no simple answers to this key question, but one reliable measure that can help investors address this issue is the company’s earnings prospects. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of the results release, the estimate revision trend for OrthoPediatrics is unfavorable. While the magnitude and direction of estimate revisions may change following the company’s just-released earnings report, the current status translates into the stock’s Zacks Rank #4 (Sell). Therefore, it can be expected that the company’s shares will underperform the market in the near future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the next quarters and the current fiscal year change in the coming days. The current consensus EPS estimate is -$0.20 on revenue of $39.34M for the coming quarter and -$0.95 on revenue of $147.79M for the current fiscal year.

Investors should be aware that the outlook for the industry may also have a significant impact on share prices. In terms of the Zacks Industry Rank, Medical – Instruments is currently in the top 44% of over 250 Zacks industries. Our research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

AxoGen (AXGN), another company in the same industry, has not yet released results for the quarter ending March 2023. The results are expected to be released on May 9.

The regenerative medicine company is expected to report quarterly loss of $0.15 per share in its upcoming report, representing a year-over-year change of +25%. The consensus EPS estimate for the quarter has not changed over the last 30 days.

AxoGen’s revenue is expected to be $35.8 million, up 15.5% from the same quarter last year.

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