Back to top

Analyst Blog

On Oct 8, we reiterated our Neutral recommendation on Mindray Medical International Limited (MR - Analyst Report). Although the medical device company’s domestic sales remain robust, it is currently facing a difficult environment in developed international markets.

Why the Retention?

On Aug 5, Mindray posted a 17.8% rise in second-quarter 2013 adjusted earnings per share to $0.53 from $0.45 a year ago and met the Zacks Consensus Estimate. Net revenues grew 14.7% to $307.2 million but missed the Zacks Consensus Estimate of $319 million.

The company’s earnings have beaten the Zacks Consensus Estimate in 2 out of the last 4 quarters, while meeting the same in the last reported quarter, thus maintaining an average surprise of 5.42%. Following the earnings release, the Zacks Consensus Estimate for 2013 earnings inched up 1.5% to $2.01 and then 1.0% to $2.03 per share. However, the estimate for 2014 earnings declined 1.8% to $2.20 and then 0.9% to $2.18 over the same period.

Furthermore, the acquisition of ZONARE in July has led management to raise its year-over-year rise in revenues guidance to at least 18% from 17%. However, MR reiterated adjusted net earnings guidance, anticipating at least 15% rise over 2012.

Mindray is a bellwether in the Chinese medical devices industry. The company has a large domestic sales infrastructure, which gives it better access to medium-sized county hospitals. In China, it beats other multinationals on price and defeats local players, who have cheaper products, on brand recognition.

In western markets, MR targets mid-market and price-sensitive customers. Although it has entered the premium segment globally, its competitive advantage is still unclear. Uncertainties in healthcare reforms in the U.S. have reduced demand for Mindray’s products. Moreover, competition is fierce and threatens price erosion over time.  

Other Stocks to Consider

Medical instruments stocks that warrant a look include Dexcom, Inc. (DXCM - Analyst Report), Masimo Corporation (MASI - Analyst Report) and MAKO Surgical Corp. . All these stocks carry a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
QIHOO 360 T… QIHU 95.04 +4.95%
PILGRIM'S P… PPC 31.52 +3.72%
CLAYTON WIL… CWEI 138.97 +3.55%
FLAMEL TECH… FLML 14.02 +3.16%
CALLON PETE… CPE 11.50 +3.14%