Why Investors Need to Take Advantage of These 2 Medical Stocks Now

Zacks Research highlights its Earnings ESP (Expected Surprise Prediction) tool, which identifies stocks likely to beat earnings estimates by comparing the Most Accurate Estimate to the Zacks Consensus Estimate. Historically, stocks with a positive ESP and a Zacks Rank #3 (Hold) or stronger have delivered positive earnings surprises 70% of the time, with a 28% average annual return over a decade. The article specifically points to Incyte (INCY) with a +3.48% ESP and Novartis (NVS) with a +0.30% ESP, both holding a Zacks Rank #3, as medical stocks potentially poised for earnings beats ahead of their October 28, 2025 reports.

Analysis

The Zacks Earnings ESP (Expected Surprise Prediction) tool identifies stocks likely to beat quarterly earnings estimates by comparing the Most Accurate Estimate to the Zacks Consensus Estimate. Historically, stocks with a positive ESP and a Zacks Rank #3 (Hold) or stronger have delivered a positive bottom-line surprise 70% of the time, with a 10-year backtest showing average annual returns of approximately 28% for such selections. This methodology leverages the premise that more recent analyst estimates tend to be more accurate.

Incyte (INCY), currently a Zacks Rank #3 (Hold), exhibits a positive Earnings ESP of +3.48%, derived from a Most Accurate Estimate of $1.72 against a Zacks Consensus Estimate of $1.66. Similarly, Novartis (NVS), also a Zacks Rank #3 (Hold), shows a positive ESP of +0.30%, with its Most Accurate Estimate at $2.27 versus a consensus of $2.26. Both medical stocks are scheduled to report earnings on October 28, 2025, suggesting a potential for earnings beats based on this model.

The broader Zacks Rank system, which informs the ESP metric, has demonstrated significant outperformance, averaging +24.08% annual returns since 1988, more than doubling the S&P 500. While a #3 (Hold) rank suggests in-line market performance, its combination with a positive ESP indicates a higher probability of exceeding earnings expectations, which can positively influence stock prices in the near term.

Key Decisions for Investors

• Investors should consider the potential for short-term price movements in Incyte (INCY) and Novartis (NVS) ahead of their October 28, 2025 earnings reports, given their positive Earnings ESP figures.
• Evaluate the historical efficacy of the Zacks Earnings ESP model, which has shown a 70% success rate for positive surprises and strong average annual returns when combined with a Zacks Rank #3 or stronger.
• Monitor the actual earnings results for INCY and NVS closely, as a confirmed beat could validate the ESP signal and potentially lead to upward stock price adjustments.