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Haemonetics' Plasma Group Impresses, Blood Center a Drag

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On Dec 12, we issued an updated research report on Braintree, MA-based Haemonetics Corporation (HAE - Free Report) . The company offers blood management solutions to customers, including blood and plasma collectors, hospitals and health care providers, globally.

Heamonetics has been performing well in recent times, supported by its strong fundamentals and progress in strategic executions. In this regard, we note that the company’s revenues and earnings have improved at a five-year CAGR of 5.7% and 1.9%, respectively. In fact, the company recently reported impressive results for the second quarter of fiscal 2017, wherein both earnings and revenues surpassed the Zacks Consensus Estimate.

For the majority of the last six months, Haemonetics has surpassed the Zacks categorized Medical Products Industry in terms of price performance. Per the latest price chart, the stock has gained 37.8%, whereas the broader industry has declined 6.6%. Additionally, the company’s estimates for the full year reflect a favorable trend. The company has seen six upward revisions with no downward revision in the last couple of months. Over the same period, current-year estimates have increased by 5 cents from $1.44 to $1.49.

Of late, the company has successfully delivered robust growth in its two franchises – Plasma and TEG hemostasis management. Haemonetics is currently enjoying half of the North American disposables growth in the end market for plasma-derived biopharmaceuticals. 

Currently, management is engaged in innovations to differentiate its product offering, which along with proper coordination with its customers, will help optimize collection productivity and yield. Haemonetics claims that its next generation plasma collection software in the U.S. has seen strong customer interest. Recently, the company launched an advanced version of NextGen DMS 4 to enhance plasma collection center operations.

Reportedly, Haemonetics has taken up a strategic initiative to restructure itself in three phases – stabilize, transform, and accelerate growth. The company aims to achieve successful implementation of this initiative through increased focus and committed leadership.

Despite the encouraging growth in Plasma and Haemonetics Management franchises, the underperformance at the other two franchises – Blood Center and Cell Processing – was quite a disappointment in the last reported quarter. Haemonetics witnessed a significant decline in the BloodCenter franchise due to the advancement of double dose platelet collections in Japan, pricing and volume declines in double red cell collections and persistent decline in overall whole blood market. This trend is expected to continue in the upcoming quarters as well.

Also, gross margin decline is a major concern. The product recall of leukoreduction filter hurt Hameonetics’ earnings in the second quarter, the effect of which is expected to linger. Macroeconomic uncertainties and stiff market competition add to the woes.

Zacks Rank & Other Stocks to Consider

Haemonetics carries a Zacks Rank #2 (Buy). Other well-ranked medical stocks are NxStage Medical Inc. , Baxter International Inc. (BAX - Free Report) and Bovie Medical Corporation . NxStage Medical and Baxter International sport a Zacks Rank #1 (Strong Buy), while Bovie Medical carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

NxStage Medical surged 33.9% over the last one year compared with the S&P 500’s 11.6% over the same period. The company has a four-quarter average positive earnings surprise of 46.3%.

Baxter International rallied 23.2% over the last one year, much higher than the S&P 500. It has a trailing four-quarter average positive earnings surprise of 27%.

Bovie Medical recorded a 103.2% gain in the past one year, way better than the S&P 500. The company has a trailing four-quarter positive average earnings surprise of 28.7%.

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