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Here's Why You Should Retain Haemonetics (HAE) Stock for Now
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Haemonetics Corporation (HAE - Free Report) has been gaining from strength in the Hospital business. Strong customer end-market demand for NexSys PCS system with Persona technology buoys optimism. A rebound in plasma collection is an added plus. However, mounting operating expenses and soft Blood Center sales do not bode well for the company.
Over the past year, the Zacks Rank #3 (Hold) stock has declined 52.5% against a 15.3% fall of the industry and a 13% rise of the S&P 500.
The renowned medical device company has a market capitalization of $2.97 billion. Its third-quarter fiscal 2022 earnings surpassed the Zacks Consensus Estimate by 12%.
Over the past five years, the company registered earnings growth of 7%, ahead of the industry’s 7.8% rise and the S&P 500’s 2.8% increase. The company’s long-term projected growth of 10% compares with the industry’s growth projection of 16.6% and the S&P 500’s expectation of 11.2% growth.
Image Source: Zacks Investment Research
Let’s delve deeper.
Factors At Play
Q3 Upsides: Haemonetics ended the third quarter of fiscal 2022 with better-than-expected earnings. The company recorded year-over-year growth in revenues driven by a recovery across businesses. The company’s Hospital business was robust along with Hemostasis Management and Vascular Closure registering record-high quarterly sales. Expansion of gross margin buoys is an added advantage. Further, Haemonetics’ Operational Excellence program coupled with other cost-mitigation efforts partially offset inflationary pressure, allowing the company to maintain fund investments for long-term growth.
Recovery Across Businesses: We are upbeat about the robust performance of Haemonetics’ businesses, backed by strong procedure recovery in the Hospital business, the resilience of blood donors in blood centers, and rollouts of the Persona technology and NexSys. The Hospital business revenues grew 56.3% in the fiscal third quarter, primarily driven by a continued rebound in procedures amid challenges posed by hospital staffing shortages and supply-chain disruptions in the Asia Pacific. Plasma collections also continued to recover in the quarter under review.
Potential Upsides of Plasma Franchise: Haemonetics has been witnessing strong growth in the Plasma franchise for quite some time. During the fiscal third quarter, the company successfully converted several hundred plasma centers to the NexSys platform without interruption to their daily collections. The company has also made the NexSys PCS devices available in the United States to ensure timely conversion of the remainder of its major customers by mid-fiscal 2023. In terms of the Persona technology, the company has made significant progress as it expects more plasma centers to be using its personalized nomogram by the end of this fiscal year. Haemonetics’ fully integrated NexSys platform, consisting of the NexSys PCS device, NexLynk DMS software and Donor360 app, allows for a faster procedure time, raising optimism.
Downsides
Sluggish Blood Center Business: During the fiscal third quarter, Haemonetics witnessed a sluggish performance in its Blood Center business due to pandemic-led business disruptions. Blood Center revenues declined 6.5% as the emergence of the Omicron variant impacted U.S. blood collections.
Escalating Expenses: Haemonetics’ adjusted operating expenses in the fiscal third quarter were up 24.1% from the year-ago quarter. This increase was primarily driven by the acquisition of the Vascular Closure business and an increase in freight costs. These escalating expenses resulted in a 120-basis point contraction in adjusted operating margin, building pressure on the bottom line.
Highly Leveraged Balance Sheet: Haemonetics’ total debt-to-capital ratio of 0.46 for the fiscal third quarter stands at a high level, indicating a highly leveraged balance sheet. This figure compares with the total debt-to-capital ratio of 0.50 at the end of the fiscal second quarter.
Estimate Trend
Over the past 30 days, the Zacks Consensus Estimate for Haemonetics’ 2022 earnings has moved down by 0.8% to $2.52.
The Zacks Consensus Estimate for fiscal 2022 revenues is pegged at $987.14 million, suggesting a 13.4% rise from the 2020 reported number.
Henry Schein has an estimated long-term growth rate of 11.8%. Henry Schein’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.5%.
Henry Schein has outperformed the industry over the past year. HSIC has gained 36.8% compared with the industry’s 11.7% rise over the past year.
Owens & Minor has a long-term earnings growth rate of 23.6%. Owens & Minor’s earnings surpassed estimates in the trailing four quarters, delivering a surprise of 32.4%, on average.
Owens & Minor has outperformed the industry over the past year. OMI has gained 31.8% against a 15.3% industry decline in the said period.
AmerisourceBergen has a long-term earnings growth rate of 8.2%. In the trailing four quarters, AmerisourceBergen’s earnings surpassed estimates in three and missed in one, delivering an average surprise of 2.3%.
AmerisourceBergen has outperformed its industry in the past year, gaining 38.3% versus the industry’s 11.6% rise.
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Here's Why You Should Retain Haemonetics (HAE) Stock for Now
Haemonetics Corporation (HAE - Free Report) has been gaining from strength in the Hospital business. Strong customer end-market demand for NexSys PCS system with Persona technology buoys optimism. A rebound in plasma collection is an added plus. However, mounting operating expenses and soft Blood Center sales do not bode well for the company.
Over the past year, the Zacks Rank #3 (Hold) stock has declined 52.5% against a 15.3% fall of the industry and a 13% rise of the S&P 500.
The renowned medical device company has a market capitalization of $2.97 billion. Its third-quarter fiscal 2022 earnings surpassed the Zacks Consensus Estimate by 12%.
Over the past five years, the company registered earnings growth of 7%, ahead of the industry’s 7.8% rise and the S&P 500’s 2.8% increase. The company’s long-term projected growth of 10% compares with the industry’s growth projection of 16.6% and the S&P 500’s expectation of 11.2% growth.
Image Source: Zacks Investment Research
Let’s delve deeper.
Factors At Play
Q3 Upsides: Haemonetics ended the third quarter of fiscal 2022 with better-than-expected earnings. The company recorded year-over-year growth in revenues driven by a recovery across businesses. The company’s Hospital business was robust along with Hemostasis Management and Vascular Closure registering record-high quarterly sales. Expansion of gross margin buoys is an added advantage. Further, Haemonetics’ Operational Excellence program coupled with other cost-mitigation efforts partially offset inflationary pressure, allowing the company to maintain fund investments for long-term growth.
Recovery Across Businesses: We are upbeat about the robust performance of Haemonetics’ businesses, backed by strong procedure recovery in the Hospital business, the resilience of blood donors in blood centers, and rollouts of the Persona technology and NexSys. The Hospital business revenues grew 56.3% in the fiscal third quarter, primarily driven by a continued rebound in procedures amid challenges posed by hospital staffing shortages and supply-chain disruptions in the Asia Pacific. Plasma collections also continued to recover in the quarter under review.
Potential Upsides of Plasma Franchise: Haemonetics has been witnessing strong growth in the Plasma franchise for quite some time. During the fiscal third quarter, the company successfully converted several hundred plasma centers to the NexSys platform without interruption to their daily collections. The company has also made the NexSys PCS devices available in the United States to ensure timely conversion of the remainder of its major customers by mid-fiscal 2023. In terms of the Persona technology, the company has made significant progress as it expects more plasma centers to be using its personalized nomogram by the end of this fiscal year. Haemonetics’ fully integrated NexSys platform, consisting of the NexSys PCS device, NexLynk DMS software and Donor360 app, allows for a faster procedure time, raising optimism.
Downsides
Sluggish Blood Center Business: During the fiscal third quarter, Haemonetics witnessed a sluggish performance in its Blood Center business due to pandemic-led business disruptions. Blood Center revenues declined 6.5% as the emergence of the Omicron variant impacted U.S. blood collections.
Escalating Expenses: Haemonetics’ adjusted operating expenses in the fiscal third quarter were up 24.1% from the year-ago quarter. This increase was primarily driven by the acquisition of the Vascular Closure business and an increase in freight costs. These escalating expenses resulted in a 120-basis point contraction in adjusted operating margin, building pressure on the bottom line.
Highly Leveraged Balance Sheet: Haemonetics’ total debt-to-capital ratio of 0.46 for the fiscal third quarter stands at a high level, indicating a highly leveraged balance sheet. This figure compares with the total debt-to-capital ratio of 0.50 at the end of the fiscal second quarter.
Estimate Trend
Over the past 30 days, the Zacks Consensus Estimate for Haemonetics’ 2022 earnings has moved down by 0.8% to $2.52.
The Zacks Consensus Estimate for fiscal 2022 revenues is pegged at $987.14 million, suggesting a 13.4% rise from the 2020 reported number.
Key Picks
A few better-ranked stocks in the broader medical space are Henry Schein, Inc. (HSIC - Free Report) , Owens & Minor, Inc. (OMI - Free Report) and AmerisourceBergen Corporation , each sporting a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Henry Schein has an estimated long-term growth rate of 11.8%. Henry Schein’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.5%.
Henry Schein has outperformed the industry over the past year. HSIC has gained 36.8% compared with the industry’s 11.7% rise over the past year.
Owens & Minor has a long-term earnings growth rate of 23.6%. Owens & Minor’s earnings surpassed estimates in the trailing four quarters, delivering a surprise of 32.4%, on average.
Owens & Minor has outperformed the industry over the past year. OMI has gained 31.8% against a 15.3% industry decline in the said period.
AmerisourceBergen has a long-term earnings growth rate of 8.2%. In the trailing four quarters, AmerisourceBergen’s earnings surpassed estimates in three and missed in one, delivering an average surprise of 2.3%.
AmerisourceBergen has outperformed its industry in the past year, gaining 38.3% versus the industry’s 11.6% rise.