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Analyst Blog

On Mar 28, we issued an updated research report on Haemonetics Corporation (HAE - Analyst Report) – a global provider of blood management solutions. Haemonetics delivered an unimpressive third quarter of fiscal 2014 with in-line earnings and a top-line miss. However, we are encouraged with the performance of the three main parts of Haemonetics’ business: Plasma, TEG and the emerging markets that represented 55% of its base business revenues in the reported quarter.

In the quarter, adjusted earnings per share (EPS) increased 5.2% to 61 cents, but were in line with the Zacks Consensus Estimate. On the other hand, revenues of $242.1 million were down 2.1% year over year and also lagged the Zacks Consensus Estimate of $245 million.

Haemonetics has been plagued by several issues in recent times. Blood center disposables revenues declined 10% due to weak U.S. blood collection market and loss of a European tender. Moreover, hospital disposable revenues declined 3% driven by an 11.1% fall in Surgical disposables sales, due to the return of a competitor whose production operations had been limited by a natural disaster in the prior year.

Taking into consideration the weak disposable market, an uncertain economic scenario, the delay in a customer tender and the impact of the recent American Red Cross contract loss, Haemonetics lowered its fiscal 2014 guidance. Haemonetics now expects adjusted EPS for the fiscal year to meet the lower end of its previously announced range implying annualized growth of 15–20%.

On a brighter note, Plasma, TEG and emerging market businesses that grew a solid 13% year over year, remain as major growth drivers. Strong end-market demand for plasma-derived biopharmaceuticals continues to fuel collections. Furthermore, the company continued to benefit from the new direct selling approach in Australia and New Zealand. TEG also increased a stupendous 27% in the quarter with double-digit growth expected again in the fourth quarter.

Other Stocks to Consider

While Haemonetics carries a Zacks Rank #5 (Sell), better-ranked stocks worth considering in the broader medical sector are ABIOMED, Inc. (ABMD - Analyst Report), Cyberonics Inc. (CYBX - Analyst Report) and DexCom, Inc. (DXCM - Analyst Report). All the three stocks bear a Zacks Rank #2 (Buy).

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