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Hospira Inc. (HSP - Analyst Report) is all set to announce its third quarter 2012 results before the market opens on November 7, 2012. The Zacks Consensus Estimate for the third quarter of 2012 is 45 cents, reflecting an estimated year-over-year decline of 31.17%. The slowdown in production at Hospira’s facility in Rocky Mountain, North Carolina, is expected to continue impacting earnings.

Second Quarter Recap

Hospira’s second quarter 2012 earnings (excluding special items) of 51 cents per share beat the Zacks Consensus Estimate of 49 cents. However, earnings fell short of the year-ago figure by 45.7%.

Hospira’s second quarter 2012 revenues were $1.0 billion, surpassing the Zacks Consensus Estimate of $986 million. Revenues were, however, 2.9% lower than the year-ago figure.

The Specialty Injectable Pharmaceuticals (SIP) segment is the biggest contributor to Hospira’s top line. Although second quarter 2012 SIP sales declined 4.6% (down 1.7% at constant currency) to $644.2 million from the year-ago period, we note that the year-over-year comparisons were tough as Hospira’s generic version of Sanofi’s (SNY - Analyst Report) ) Taxotere was approved in the US in March 2011.

Agreement of Estimate Revisions

Over the past thirty days, most analysts covering Hospira have left their earnings estimates unchanged for the third quarter of 2012. Only two analysts have revised earnings estimates for the third quarter of 2012, one in either direction. We believe that most analysts have preferred to adopt a wait-and-watch approach until Hospira unfurls its results on November 7 before revising their estimates.

Earnings estimates for fiscal 2012 have been slashed by two analysts over the last thirty days with no upward movement(s). Similarly, two analysts have reduced their earnings estimates for fiscal 2013 over the last thirty days with no upward movement(s).

Magnitude of Estimate Revisions

Given the lack of earnings estimate revisions, earnings estimates for the third quarter of 2012 have gone down by a penny to 45 cents over the last 30 days. Earnings estimates for fiscal 2012 and fiscal 2013 have gone down by a penny each, over the last 30 days to $2.00 and $2.47 per share, respectively.

Surprise History

Hospira has surpassed earnings estimates in two of the last four quarters, in addition to reporting in line earnings in the remaining two quarters. On average, the earnings surprise was 8.71%.

Our Recommendation

We have a Neutral recommendation on Hospira. The stock carries a Zacks #3 Rank (Hold rating) in the short run.

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