The final amendment in Donald Trump’s healthcare bill as offered late last month was apparently not of much help in calming the healthcare economy from the upheaval caused by the first version of the proposed American Health Care Act (AHCA).

The original AHCA proposal was grossly criticized by both Democrats and Republicans, as reflected in last month’s House poll. The Democrats pointed to the Congressional Budget Office's (CBO) analysis that there would be 24 million more uninsured in a decade from now under AHCA. Republicans too were of the view that AHCA will not bring the desired results.

Though from the House vote results it was quite clear to the Trump administration that full repeal and replacement of the Affordable Care Act will never be accepted by mass, they refuted complete change of their original planning. This comes as no surprise as Trump was always extremely vocal against the Affordable Care Act (ACA).

The Amendment in a Nutshell

The proposed amendment submitted to the House of Ways and Means Committee consists of the creation of a risk-sharing program as part of the AHCA’s Patient and State Stability Fund (PSSF). The aim is to set aside funds to be used in covering a portion of costs alongside insurers. This would invariably result in bringing down premium costs while accommodating more people under the healthcare umbrella.

Per the proposed amendment, the government would set aside $15 billion within the PSSF. The Health Department would then carry out the risk sharing program by providing payments to health insurers for individual claims. The sharing of the burden by the government would result in lower premiums allowing the insurance umbrella to cast a wider net. If the amendment is enacted it would be effective from Jan 1, 2018.

Boon or Bane for MedTech?

The foremost question that arises now is whether Medical Device stocks stand to gain or lose on the developments at Capitol Hill. Supporters for the Republican alternative argue that if the proposed amendment is implemented, more people would be covered as a portion of the cost would be borne by the government. Needless to mention, this may lead to broadening of customer base for the MedTech companies, who could have otherwise suffered.

On the other hand, the medical device industry was earlier happy with the original Trump action plan which promised cancellation of major healthcare taxes including the two signature taxes of Obamacare, the unpopular Cadillac tax (40% excise tax on high-cost healthcare plans) and the controversial 2.3% MedTech tax. With the original plan being voted out, the fraternity is worried whether the final plan will still include the MedTech tax repeal within its agenda.

Ahead of Earnings

The earnings season will kick start this week with most of the MedTech majors lining up for their earnings release later this month. Amid the present eco-political hullabaloo, we lack visibility whether this space will continue to maintain its bullish run. Our latest Earnings Preview however, fails to give any encouraging picture with the broader Medical space expected to register year-over-year earnings decline of 0.6% on revenue growth of 6.2% in the quarter.

Making the Right Choice

Given the numerous stocks in the medical device sector that almost always muddle one’s stock-picking prowess, the Zacks methodology could offer some relief. One can narrow down the choices by focusing on Medical - Products stocks (a specialized chunk under the medical device subcategory) that have the desirable combination of a positive Earnings ESP and a favorable Zacks Rank – Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Earnings ESP is our proprietary methodology for identifying stocks that have high chances of surprising with their next earnings announcement. It shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.

Going by this criterion, we hereby present three medical device stocks that are poised to beat estimates this quarter.

Hill-Rom Holdings, Inc. (HRC - Free Report)

Headquartered in Batesville, IN, Hill-Rom Holdings, Inc. is one of the leading global medical device companies. Hill-Rom outperformed the Zacks categorized Medical Products industry in the last one month. The company recorded a rise of almost 19.1% compared with the broader industry's gain of 5.5%. We are upbeat about the company’s top line and bottom-line guidance for the second quarter of fiscal 2017, strong U.S. growth and solid margin performance. Based on these catalysts, we expect Hill-Rom to maintain its bullish share price trend in the days ahead. We are also looking forward to its plan to acquire Mortara Instrument.

Hill Rom is scheduled to report its fiscal second-quarter numbers on Apr 28. We expect the company to beat earnings estimates as it has a Zacks Rank #2 and an Earnings ESP of +1.27%.

LeMaitre Vascular, Inc. (LMAT - Free Report)

This renowned medical device is a provider of devices, implants and services for the treatment of peripheral vascular disease. The past six months were favorable for the stock. The company recorded a rise of almost 29% compared with the Zacks categorized Medical Products industry's gain of 1.3%. We believe the company’s expanded existing product offerings should also support the growth momentum.

LeMaitre Vascular is scheduled to report its first-quarter 2017 numbers on Apr 26. We expect the company to beat earnings estimates as it has an Earnings ESP of +7.69% and a Zacks Rank #3. You can see  the complete list of today’s Zacks #1 Rank stocks here.

Chimerix, Inc. (CMRX - Free Report)

This is a biopharmaceutical company that develops medicines that improve outcomes for immuno-compromised patients. In the past three months, Chimerix consistently traded higher than the Zacks categorized Medical Products industry. The stock gained 18.3% compared with the 5.5% growth of the broader industry.

Chimerix is expected to report its first-quarter 2017 numbers on Apr 26. We expect the company to beat earnings estimates as it has a Zacks Rank #3 and an Earnings ESP of +5.41%.