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Hill-Rom Hits New 52-Week High: What's Driving the Stock?

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Shares of Hill-Rom Holdings, Inc. (HRC - Free Report) reached a new 52-week high of $114.97 on Jan 2, closing the session marginally lower at $113.74. The stock has rallied 5.6% since its third-quarter earnings announcement on Nov 1.

The company’s strong third-quarter results, backed by robust Patient Support Systems and global revenue growth, prompted this uptrend.

Let us delve deeper.


Q3 Performance

Hill-Rom exited fiscal 2019 on a strong note with better-than-expected results. The company saw a solid year-over-year increase in revenues on robust domestic growth, driven by sturdy performances in Patient Support Systems. Internationally, Asia Pacific, Latin America and EMEA registered strong revenue growth.

Hill-Rom is upbeat about continuing with the recent trend in the EMEA and the Asia Pacific, aided by a robust improvement in revenues on balanced growth across its segments and all geographies.

Other Key Drivers

Acquisitions: Hill-Rom has been steadily working toward acquisitions to accelerate growth across five key clinical focus areas, such as advancing patient mobility, wound care and prevention, surgical, safety and efficiency, clinical workflow solutions as well as respiratory help. The buyout of Voalte continues to reap benefits for Hill-Rom. In August 2019, the company announced the buyout of Breath Technologies, a developer and manufacturer of a patented nasal cannula technology that enables improved patient mobility. This latest takeover bodes well for Hill-Rom through fiscal 2020 as well.

Product Portfolio: Of late, the company is focusing on expansion through product development as reflected in higher research and development expenditure, which buoys optimism. The contribution from new products gave a significant boost to the top line in fiscal 2019. Hill-Rom recently introduced various products like RetinaVue 700 Imager, EarlySense and WatchCare. It expects to register long-lasting growth in the upcoming quarters with strong pipeline of products.

Digital Health Space: Investors are upbeat about Hill-Rom’s recently launched smartphone application, Linq mobile. This integrated Clinical Workflows with Nurse Call and clinical surveillance with monitoring systems, which facilitated team communication as well as efficiency. The company has also partnered with Microsoft as a strategic step toward boosting its position in the Digital Health space. This alliance is further expected to contribute to the company’s top line through fiscal 2020.

Zacks Rank & Key Picks

Currently, Hill-Rom carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the broader medical space are Haemonetics Corporation (HAE - Free Report) , Vapotherm, Inc (VAPO - Free Report) and Medtronic plc (MDT - Free Report) .

Haemonetics has a Zacks Rank #1 (Strong Buy) and a projected long-term earnings growth rate of 13.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Vapotherm’s long-term earnings growth rate is estimated at 49.5%. The company currently carries a Zacks Rank #2 (Buy).

Medtronic’s long-term earnings growth rate is expected at 7.4%. It is currently Zacks #2 Ranked.

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