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Haemonetics (HAE) Up 4.2% Since Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Haemonetics Corporation (HAE - Free Report) . Shares have added about 4.2% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is HAE due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Recent Earnings
Haemonetics reported adjusted earnings per share (EPS) of 62 cents in the third quarter of fiscal 2018, a 44% surge year over year. The bottom line also beat the Zacks Consensus Estimate of 41 cents. The metric was favourably attributed by 10 cents of lower tax rate and 4 cents of currency translation, partly offset by a couple of cents’ dilution on increased share count.
On a reported basis, Haemonetics posted net loss of 12 cents per share compared with earnings of 30 cents in the prior-year quarter. The metric included $12 million of net transition tax on earnings from certain foreign subsidiaries, previously tax deferred. However, the same is partly offset by a $7-million benefit from the revaluation of deferred tax items using the lower corporate tax rates effective Jan 1, 2018.
Total Revenues
Revenues were up 2.7% year over year (up 1.1% at constant exchange rate or CER) to $234 million in the reported quarter. The top line also exceeded the Zacks Consensus Estimate of $227 million. The year-over-year growth was consistently backed by strong results in North America and improving international results in the key markets.
Revenues by Product Categories
Haemonetics reports operating results under four business franchises: Plasma, Haemostasis Management, Cell Processing and Blood Center.
At Plasma, reported revenues of $113.1 million (48.3% of total revenues) were up 4.1% year over year (up 5% at CER).
Revenues at BloodCenter (31.8% of total revenues) declined 2.8% (down 5.1% at CER) to $74.2 million.
Hemostasis Management franchise revenues (8.5% of total revenues) rose 17.6% (up 15.7% at CER) to $19.9 million. Revenues from Cell Processing were up 3.5% (up 0.6% at CER) to $26.8 million (11.5% of total revenues).
Margins
Haemonetics’ third-quarter adjusted gross margin was 47.6%, up 310 basis points (bps) year over year, driven by favorable mix, productivity and currency.
Adjusted operating income was $41.8 million in the quarter, a 20.5% rally year over year. Adjusted operating margin expanded 270 bps year over year to 17.9% in the quarter under review. Favourable foreign currency translation contributed about 100 basis points to year-over-year operating margin improvement.
Financial Position
Haemonetics exited the third quarter of fiscal 2018 with cash and cash equivalents of $252 million compared with $203.6 million at the end of the preceding year. The company generated operating cash flow of $163 million year to date. Adjusted free cash flow (before transformation and restructuring costs) was $113.4 million year-to-date, a 33% increase from the year-ago period.
Fiscal 2018 Guidance
Haemonetics revised its fiscal 2018 revenue guidance. The company expects full-year revenues to be in line with fiscal 2017 revenues (excludes currency impact of over 50 bps). The view for Plasma revenue growth has been raised to 5% from the 3-5% range, projected earlier. The outlook for hospital revenue rise has been updated to 6% from the earlier expectation of 7-10%. Blood Center revenues are likely to decline in the 6-7% range (the previous guidance was a decrease of 7-10%). The Zacks Consensus Estimate for 2018 revenues is pegged at $892.1 million.
The company raised its 2018 adjusted EPS guidance to $1.80-$1.90 from the previous band of $1.65-$1.75. The Zacks Consensus Estimate of $1.69 remains below the guided range.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to three lower.
At this time, HAE has a strong Growth Score of A, though it is lagging a lot on the momentum front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, HAE has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Haemonetics (HAE) Up 4.2% Since Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Haemonetics Corporation (HAE - Free Report) . Shares have added about 4.2% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is HAE due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Recent Earnings
Haemonetics reported adjusted earnings per share (EPS) of 62 cents in the third quarter of fiscal 2018, a 44% surge year over year. The bottom line also beat the Zacks Consensus Estimate of 41 cents. The metric was favourably attributed by 10 cents of lower tax rate and 4 cents of currency translation, partly offset by a couple of cents’ dilution on increased share count.
On a reported basis, Haemonetics posted net loss of 12 cents per share compared with earnings of 30 cents in the prior-year quarter. The metric included $12 million of net transition tax on earnings from certain foreign subsidiaries, previously tax deferred. However, the same is partly offset by a $7-million benefit from the revaluation of deferred tax items using the lower corporate tax rates effective Jan 1, 2018.
Total Revenues
Revenues were up 2.7% year over year (up 1.1% at constant exchange rate or CER) to $234 million in the reported quarter. The top line also exceeded the Zacks Consensus Estimate of $227 million. The year-over-year growth was consistently backed by strong results in North America and improving international results in the key markets.
Revenues by Product Categories
Haemonetics reports operating results under four business franchises: Plasma, Haemostasis Management, Cell Processing and Blood Center.
At Plasma, reported revenues of $113.1 million (48.3% of total revenues) were up 4.1% year over year (up 5% at CER).
Revenues at BloodCenter (31.8% of total revenues) declined 2.8% (down 5.1% at CER) to $74.2 million.
Hemostasis Management franchise revenues (8.5% of total revenues) rose 17.6% (up 15.7% at CER) to $19.9 million. Revenues from Cell Processing were up 3.5% (up 0.6% at CER) to $26.8 million (11.5% of total revenues).
Margins
Haemonetics’ third-quarter adjusted gross margin was 47.6%, up 310 basis points (bps) year over year, driven by favorable mix, productivity and currency.
Adjusted operating income was $41.8 million in the quarter, a 20.5% rally year over year. Adjusted operating margin expanded 270 bps year over year to 17.9% in the quarter under review. Favourable foreign currency translation contributed about 100 basis points to year-over-year operating margin improvement.
Financial Position
Haemonetics exited the third quarter of fiscal 2018 with cash and cash equivalents of $252 million compared with $203.6 million at the end of the preceding year. The company generated operating cash flow of $163 million year to date. Adjusted free cash flow (before transformation and restructuring costs) was $113.4 million year-to-date, a 33% increase from the year-ago period.
Fiscal 2018 Guidance
Haemonetics revised its fiscal 2018 revenue guidance. The company expects full-year revenues to be in line with fiscal 2017 revenues (excludes currency impact of over 50 bps). The view for Plasma revenue growth has been raised to 5% from the 3-5% range, projected earlier. The outlook for hospital revenue rise has been updated to 6% from the earlier expectation of 7-10%. Blood Center revenues are likely to decline in the 6-7% range (the previous guidance was a decrease of 7-10%). The Zacks Consensus Estimate for 2018 revenues is pegged at $892.1 million.
The company raised its 2018 adjusted EPS guidance to $1.80-$1.90 from the previous band of $1.65-$1.75. The Zacks Consensus Estimate of $1.69 remains below the guided range.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to three lower.
Haemonetics Corporation Price and Consensus
Haemonetics Corporation Price and Consensus | Haemonetics Corporation Quote
VGM Scores
At this time, HAE has a strong Growth Score of A, though it is lagging a lot on the momentum front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, HAE has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.