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Haemonetics (HAE) Down 8.9% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Haemonetics (HAE - Free Report) . Shares have lost about 8.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Haemonetics due for a breakout? 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 catalysts.

Strong Plasma Business Drives Haemonetics’ Q2 Earnings

Haemonetics Corporation reported adjusted earnings per share (EPS) of 56 cents in the second quarter of fiscal 2019, reflecting a 16.7% rise year over year. The bottom line surpassed the Zacks Consensus Estimate of 54 cents by 3.7%.

On a reported basis, net income came in at 35 cents per share, down 7.9% year over year.

Total Revenues

Revenues rose 7.2% year over year (same at constant exchange rate or CER) to $241.6 million in the quarter under review. Moreover, the top line exceeded the Zacks Consensus Estimate by 3.2%.

Revenues by Product Categories

At Plasma, reported revenues of $124.4 million (accounting for 51.5% of total revenues) rose 13.3% year over year (same at CER). Plasma revenue growth in North America was 17%, including 16.2% growth in disposables along with strength in software revenues.

Revenues at BloodCenter (28.2% of total revenues) dropped 4.8% (down 4.7% at CER) to $68.2 million.

Hospital revenues (contributing to 20.3% of total revenues) rose 11.6% (up 11.3% at CER) to $49 million. 

Margins

Adjusted gross margin was 48.2%, up 170 basis points (bps) year over year on favorable revenue volume, price and product mix and currency movements along with savings from Complexity Reduction Initiative.

Adjusted operating income was $38.9 million in the quarter under discussion, showing a 6.4% rise year over year. Meanwhile, adjusted operating margin contracted 10 bps year over year to 16.1%.

Financial Position

Haemonetics exited the second quarter of fiscal 2019 with cash and cash equivalents of $199.8 million compared with $192.1 million at the end of first quarter of fiscal 2019.

The company generated operating cash flow of $80.5 million in the first six months of the fiscal compared with $97.3 million a year ago. The company also reported free cash flow (before restructuring and turnaround costs) of $20.8 million during the same period compared with $75.3 million a year ago. Capital expenditures totaled $75.3 million in the period, higher than $27.8 million in the same period last year.

Fiscal 2019 Guidance

Haemonetics updated its fiscal 2019 revenue guidance at CER. The company now expects full-year revenue growth of 6-8% compared with 3-5% stated previously. Coming to segmental revenues, Plasma revenue growth is expected in the 14-16% band (7-10% stated earlier) while Hospital revenues are estimated to increase 6-9% (5-8%). However, Blood Center revenues are likely to decline 3-6%. The Zacks Consensus Estimate for fiscal 2019 revenues is pegged at $972.5 million.

The company predicts 2019 adjusted EPS in the range of $2.25-$2.35 compared with the prior range of $2-$2.30. The consensus estimate of $2.33 is within this guided range.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, Haemonetics has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Haemonetics has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.




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