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Analyst Blog

On Aug 21, we updated our research report on Symmetry Medical Inc. (SMA - Analyst Report). We are impressed with the company’s stable earnings growth since the beginning of this year. We believe its decision to divest the OEM Solutions business will bode well.

SMA posted a 60.0% rise in adjusted earnings per share to 16 cents in the 2014-second-quarter ended Jun 28, 2014, from 10 cents reported in the same quarter of 2013. Adjusted earnings per share also surpassed the Zacks Consensus Estimate of 12 cents by 33.3%.

Second-quarter revenues totaled $101.3 million, up 2.3% year over year, edging past the Zacks Consensus Estimate of $99.0 million. Revenues were primarily driven by higher sales in the company's OEM Solutions segment, partially mitigated by a decrease in revenues at the Symmetry Surgical segment.

SMA announced the sale of its OEM Solutions business to privately-held Tecomet for $450 million in cash or $7.50 per share after fees and elimination of outstanding debt. The company expects the transaction to be completed by the end of 2014.

According to SMA, the proposed sale will recognize the value of the OEM Solutions business and enhance the growth potential of Symmetry Surgical, in addition to providing liquidity to shareholders.

SMA’s divestment of its U.K. based subsidiary, Clamonta Ltd. on May 22, 2014 was also in sync with its plans to focus on its core markets and reduce its manufacturing footprint. The divestment will lead to long-term benefits but negatively affect earnings and revenues in 2014.

Currently, SMA carries a Zacks Rank #2 (Buy). Other stocks that are also worth a look from the medical products industry include ICU Medical, Inc. (ICUI - Snapshot Report), Abaxis, Inc. (ABAX - Analyst Report), and NuVasive, Inc. (NUVA - Snapshot Report). ICU Medical sports a Zacks Rank #1 (Strong Buy), while both Abaxis and NuVasive carry a Zacks Rank #2 (Buy).
 

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