MedTech Earnings Alert: Waters' China Strength Mirrors JPM Conference Data

As earnings season kicks into high gear, one of the key trends we are tracking on the Amenity Viewer text analytics platform is corporate sentiment regarding the macro and trade environment in China. More specifically, we have been tracking the MedTech sector’s position as the lone beacon of strength as weak macro and micro data points regarding China hit every day.

We first identified MedTech as an outlier in our write-up on U.S. vs China Trade analysis. Our analysis was then supported by bullish commentary at the JP Morgan Healthcare Conference two weeks ago. Waters’ earnings call this morning followed suit, sending the stock up 10% today. Stay tuned for further updates across MedTech throughout earnings season.

Please note: This in no way represents investment advice. All transcript text provided by S&P Global Market Intelligence.

Waters' Commentary on China Mirrors Peers at the JPM Conference

The Waters earnings call this morning registered an Amenity Score of +40 (scale -100 to +100), up from 25 last quarter. The overall average last quarter was +20.  The earnings sentiment analysis shows that the bullish China theme for MedTech is intact and stands in stark contrast to other sectors such as Consumer or Industrial.

Amenity Viewer Text Analytics Extractions

Some additional Waters Corporation commentary:
  • 1/23/19:

"Asia, our largest region in terms of revenue, was up 9% in the fourth quarter on strong double-digit growth in China as well as great performances in Korea and Japan."

  • 1/23/19:

"The industrial business was a little bit softer in China relative to the overall growth rate, but very much led by pharma and academic and government."

Looking at the earnings transcript view, it becomes increasingly clear how much positive sentiment was attributed to China/Asia:

Amenity Viewer Transcript View

Uptick in Share Buyback Shows Confidence in Ongoing Strength

Capital Deployment stood out as one of the positive Key Drivers when compared to Waters' Q3 call. Upon digging further, the Amenity Viewer platform identified an uptick in share repurchase from $264 million in Q3 to $498 million in Q4:

Text Analytics Extraction: Stock Buyback Events

Any Caution Flags from Waters Corporation's Call? FX is the Most Prevalent

Earnings calls are never one-sided, so we analyzed the clusters of negative comments in the earnings call to look for looming risk factors.  What emerged was FX headwind, a trend we expect to impact most multi-national companies across sectors due to the stronger dollar:

  • Waters (1/23/19):

"Currency translation decreased sales growth by approximately 1%."

"At today’s rates, currency translation is expected to decrease first quarter sales growth by 2 to 3 percentage points."

"...assumes an approximate 1 percentage point negative impact from currency translation."

Join the Amenity Viewer Beta Program today to analyze earnings call transcriptions and enable you to spot outliers, identify critical insights, and understand key drivers.

Transcript text provided by S&P Global Market Intelligence.

Copyright ©2019. All rights reserved.

November 27, 2019

Quarter in Review: Retail Therapy, Target & TJX

With the peak of earnings season and Black Friday in the rear view mirror, we spent Cyber Monday using Amenity's suite of NLP tools to check on major retailers that have held earnings calls in the fourth calendar quarter of 2019. We present an analysis of the Retailing GICS Industry Group and confirm a significant bifurcation between small and large retail operations. We then offer deeper context for two widely followed retailers: Target Corporation (TGT) and The TJX Companies, Inc. (TJX). Our models uncovered evidence to suggest there may be tariff risks emerging that have not yet been fully digested by markets.
November 26, 2019

Deception Spotlight: Smucker Jammed on Revenue Growth

We highlight The J. M. Smucker Company (SJM) following the company’s 2Q20 earnings call on 22 November 2019. Despite beating EPS estimates, the underlying story remains unsettling. Focusing more on the longer-term, our analysis finds questions about revenue have triggered deceptive answers by management in earnings calls at an increasing rate, which may further erode confidence given the ongoing calls for top-line improvements. This sort of evidence may provide fodder for bear theses and be a honeypot for activists. We narrate the context for our concern and detail deceptive language detected by Amenity’s NLP models.
November 21, 2019

Amenity Portfolio Analytics: Warren Buffett's Portfolio at Berkshire Hathaway

We pilot a method for using Amenity's NLP solutions to analyze earnings calls for multiple companies and scoring their impact on portfolios of diverse, unevenly distributed holdings. We analyze Warren Buffett's holdings at Berkshire Hathaway as a test case and detail the Oracle of Omaha's Amenity Portfolio Score with attribution at the position level. We find that Berkshire Hathaway's portfolio score is significantly greater than the average company score in our universe (>12k companies, >10 years), which is a function of Buffett favoring companies with positive Amenity Scores.
October 30, 2019

Ahead of the Fed: S&P 500 Bank Barometer

We’re back on Fed Watch! With the Federal Reserve’s Open Market Committee expected to announce another rate decision at 2pm on 30 October 2019, markets have baked in more than a 90% likelihood of a 25 basis point cut. We've kept a close eye on regional and diversified banks as earnings season progresses to gauge how lower rates are impacting management commentary as well as their business and economic implications. We share our analysis context ahead of the Fed’s announcement and press conference.

Stay Informed: Join Our Newsletter

Keep up to date with our analyses and how we're making changes.