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Fresenius Medical (FMS) Well Poised on Growth Strategy 2020

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On Oct 9, we issued an updated research report on Bad Homburg, Germany-based Fresenius Medical Care (FMS - Free Report) , one of the largest integrated providers of products and services for individuals undergoing dialysis following chronic kidney failure.

Fresenius Medical has chalked out a long-term plan called the ‘Growth Strategy 2020’ to formulate a few initiatives for gaining solid market traction over the long haul.

Per the postulates of Growth Strategy 2020, Fresenius Medical aims to increase revenues to $28 billion by 2020, reflecting an average annual growth rate of around 10%. In full-year 2016, revenues increased 7% on a year-over-year basis, courtesy of strong growth in Health Care Service revenues. Furthermore, management forecasts an increase in revenues through both organic and inorganic growth.

In addition to the stock’s strong performance in its core dialysis business, Fresenius Medical intends to achieve targets by expanding its Care Coordination (non-dialysis segment) as well.

Coming to product lines, Fresenius Medical manufactures a variety of durable medical devices used in the treatment of End Stage Renal Disease (ESRD). Devices like Hemodialysis Machines, Peritoneal Dialysis Machines, Granuflo Concentrate Mixing Tanks and monitoring devices like the Crit-line platform are part of its portfolio.

Fresenius Medical provides a wide range of dialysis products in its clinics and to third parties. These include modular machine components, dialyzers, bloodline systems, HD (hemodialysis) solutions, concentrates and water treatment systems.

Acquisitions have been driving the company’s growth trajectory for long. Among the major ones, the buyouts of Cura Group, XENiOS AG, Renal Care Group, Renal Solutions, Liberty Dialysis and Sparsh Nephrocare deserve a special mention. In 2016, the company made acquisitions worth $367 million.

On the flipside, Fresenius Medical has had an unimpressive run on the bourse year to date. The stock has gained 14.4%, lower than the industry’s addition of almost 19.9%.

 

 

Zacks Rank & Key Picks

Fresenius Medical currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the medical sector are Orthofix International N.V. (OFIX - Free Report) , Luminex Corporation and IDEXX Laboratories, Inc (IDXX - Free Report) . Orthofix International and Luminex Corporation sport a Zacks Rank #1 (Strong Buy), while IDEXX Laboratories carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Orthofix International has a long-term expected earnings growth rate of 11.8%. The stock has surged roughly 39.1% over the last six months.

Luminex Corporation has a long-term expected earnings growth rate of 16.3%. The stock has rallied 14.1% over the last six months.

IDEXX Laboratories has a long-term expected earnings growth rate of 19.8%. The stock has climbed 39.2% over a year’s time.

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