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Why is Haemonetics (HAE) Up 15.6% Since Its Last Earnings Report?

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A month has gone by since the last earnings report for Haemonetics Corporation (HAE - Free Report) . Shares have added about 15.6% 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 43 cents in the fourth quarter of fiscal 2018, a 10.3% surge year over year. The bottom line, however, was at par with the Zacks Consensus Estimate.

On a reported basis, Haemonetics posted net earnings of 22 cents per share compared with a net loss of 98 cents in the prior-year quarter.

Full-year 2018 adjusted EPS came in at $1.87, up 22.2% from the prior fiscal.

Total Revenues

Revenues were up 2.4% year over year (up 0.2% at constant exchange rate or CER) to $233.6 million in the reported quarter. The top line also exceeded the Zacks Consensus Estimate of $225 million. The year-over-year growth was consistently backed by strong results in North America and improving international results in the key markets.

Full-year 2018 revenues were $903.9 million, up 2% from the prior fiscal (up 1.1% at CER).

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 $111.6 million (47.8% of total revenues) were up 10.6% year over year (up 8.9% at CER).

Revenues at BloodCenter (31.4% of total revenues) declined 10.8% (down 13.3% at CER) to $73.4 million.

Hemostasis Management franchise revenues (8.5% of total revenues) rose 14.2% (up 11.9% at CER) to $19.9 million. Revenues from Cell Processing were up 4.4% (up 0.7% at CER) to $28.6 million (12.2% of total revenues).

Margins

Haemonetics’ fourth-quarter adjusted gross margin was 45.6%, up 260 basis points (bps) year over year, driven by favorable mix and currency along with reduced non-cash inventory charges.

Adjusted operating income was $27.3 million in the quarter, a 2.3% decline year over year. Adjusted operating margin contracted 60 bps year over year to 11.7% in the quarter under review.

Financial Position

Haemonetics exited fiscal 2018 with cash and cash equivalents of $180.2 million, compared with $139.6 million at fiscal 2017-end.

Haemonetics generated operating cash flow of $220.4 million at the end of fiscal 2018, compared with $159.7 million in fiscal 2017. At the end of fiscal 2018, the company reported free cash flow (before transformation, restructuring costs and VCC capital expenditures) of $161.8 million, compared with $113.0 million in the prior year. Capital expenditures of $72.0 million has been recorded in the year, narrower than $73.3 million in the year 2017.

Fiscal 2019 Guidance

Haemonetics issued its fiscal 2019 revenue guidance. The company expects full-year revenues to grow in the band of 3-5%. Plasma revenue growth is expected to vary in 7-10% range. Hospital revenues are expected to rise in 5-8% range. Blood Center revenues are likely to decline in the 3-6% range. The Zacks Consensus Estimate for 2019 revenues is pegged at $953.8 million.

The company expects 2018 adjusted EPS to vary in the band of $2.00-$2.30. The Zacks Consensus Estimate of $2.15 remains within 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 four lower.

VGM Scores

At this time, HAE has a strong Growth Score of A, though it is lagging a bit on the momentum front with a B. However, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for growth investors than momentum investors.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Interestingly, HAE has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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