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Fresenius Medical (FMS) Tops Earnings in Q4, View Upbeat

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Fresenius Medical Care AG & Co. KGAA (FMS - Free Report) reported adjusted earnings of 63 cents per American Depositary Share (ADS) in the fourth quarter of 2016, beating the Zacks Consensus Estimate of 61 cents. Also, earnings per ADS increased from 52 cents earned in the year-ago quarter. In the last quarter as well, the company had posted a positive earnings surprise of 3.85%.

In the quarter under review, revenues increased 7.8% at constant currency (cc) on a year-over-year basis to $4,687 million but missed the Zacks Consensus Estimate of $4,746 million.

Coming to full-year results, net revenue increased 7% on a year-over-year basis to $17,911 million. Health Care Services revenues jumped 8% in the full year to $14,519 million. Dialysis Products revenues increased 1% to $3,392 million.

Segment Details

Net Healthcare revenues grew 10% to $3.799 million, with significant contribution coming from the North American market. Dialysis product revenues remained flat on a year-over-year basis at $888 million. This however implied 2% growth at cc.

By geography, North America revenues rose 9% year over year to $3,374 million, fuelled by higher dialysis treatments and an increase in U.S. revenues per treatment. Revenues from the care Coordination business grew 20% to $603 million. Dialysis business saw 6% revenue growth in the reported quarter.

EMEA revenues increased 2% year over year to $684 million. Health care services revenues in this region increased 7% (up 10% at constant currency) to $327 million. Products revenues in EMEA  declined  by  3%  to  $357  million  in  the  fourth  quarter,   primarily attributed to lower sales of dialyzers, machines, renal pharmaceuticals and bloodlines.

Revenues from Asia-Pacific grew 10% to $433 million. Net Health Care revenues in the region grew 12%, courtesy of solid growth in dialysis treatments. The product business improved more than 10% at cc on strong sales across the entire dialysis product range.

Latin Americarevenues increased 1% to $192 million. Health care services revenues decreased 3% to $136 million. However, the region witnessed a strong rise in Dialysis Products revenues, which jumped 11% on a year-over-year basis to $56 million. This implies 7% growth at cc, courtesy of higher sales of dialyzers as well as hemodialysis solutions and concentrates.

Guidance

For 2017, Fresenius Medical estimates revenue growth of 8–10% at cc. Net income attributable to shareholders of the company is likely to increase around 7–9%.

Stock Performance

The price performance of Fresenius Medical has been quite favorable of late. Over the last three months, the stock added 9.5%, higher than the Zacks classified Medical Instrument sub-industry’s gain of 6.8%. Furthermore, the current return of the stock is ahead of the S&P 500’s return of 6.2% over the same time frame.

Meanwhile, the company’s recent earnings estimates have been positive. The full year has seen one estimate move higher in the past 30 days compared to no movement in the opposite direction. Notably, the full-year estimate is pegged at $2.03 at the moment.

These bullish sentiments justify the stock’s Zacks Rank #2 (Buy), indicating robust fundamentals and expectations of outperformance in the near term.

Stocks to Consider

Better-ranked stocks in the broader medical sector include Glaukos Corporation (GKOS - Free Report) , Avinger, Inc. (AVGR - Free Report) and Fluidigm Corporation . Notably, Glaukos and Fluidigm sport a Zacks Rank #1 (Strong Buy) while Avinger carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Glaukos Corporation has a long-term expected earnings growth rate of approximately 25%. Notably, the stock represents an impressive one-year return of 180.4%.

Avinger projects sales growth of 30.7% for the current year. Additionally, the company posted a positive earnings surprise of 27% in the last quarter.

Fluidigm Corporation has a long-term expected earnings growth rate of 25%. The stock has added 6.08% over the last one year.

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