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Why Is Haemonetics (HAE) Down 1.4% Since Last Earnings Report?

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A month has gone by since the last earnings report for Haemonetics (HAE - Free Report) . Shares have lost about 1.4% 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 its most recent earnings report in order to get a better handle on the important drivers.

Haemonetics Gains on Strong Plasma Arm in Q3

Haemonetics reported adjusted earnings per share (EPS) of 63 cents in the third quarter of fiscal 2019, reflecting a year-over-year rise of 1.6%. The bottom line surpassed the Zacks Consensus Estimate of 59 cents by 6.8%.

On a reported basis, net income came in at 35 cents per share, compared with net loss of 12 cents in the year-ago quarter.

Total Revenues

Revenues rose 5.7% year over year (same at constant exchange rate or CER) to $247.4 million in the quarter under review. However, the top line lagged the Zacks Consensus Estimate by 1.1%.

Revenues by Product Categories

At Plasma, revenues of $131.8 million (accounting for 53.3% of total revenues) rose 16.6% year over year (up 16% at CER). Plasma revenue growth in North America was 20.7%, including 19.2% growth in disposables.

Revenues at BloodCenter (27.1%) dropped 9.5 % (down 9.2% at CER) to $67.2 million.

Hospital revenues (19.6%) rose 3.6% (up 4.5% at CER) to $48.4 million.

Margins

Adjusted gross margin was 47.3%, down 30 basis points (bps) year over year on unfavorable currency movement.

Adjusted operating income was $42.7 million in the quarter under discussion, showing a 2% rise year over year. Meanwhile, adjusted operating margin contracted 60 bps year over year to 17.3%.

Financial Position

Haemonetics exited the third quarter of fiscal 2019 with cash and cash equivalents of $154.9 million compared with $199.8 million at the end of the second quarter of fiscal 2019.

The company generated operating cash flow of $138.6 million in the first nine months of the fiscal year compared with $162.7 million a year ago. The company also reported free cash flow (before restructuring and turnaround costs) of $57.5 million during the same period compared with $113.4 million a year ago. Capital expenditures totaled $105.2 million in the period, higher than $55.7 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. The consensus estimate of $2.32 is within this guided range.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, Haemonetics has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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




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