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Here's Why You Should Hold on to Haemonetics Stock for Now
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Haemonetics Corporation (HAE - Free Report) has been gaining on sustained underlying demand for plasma-based medicines and continued impetus in business generation. Its geographical expansion has also been impressive. Its better-than-expected revenues for Plasma business in the fourth quarter of fiscal 2020 buoy optimism. However, persistent fall in blood center revenues and a stiff competitive landscape are concerning.
Shares of the company have lost 7.8% in the past year versus the industry’s 0.2% fall and the S&P 500’s 10.5% rise.
The renowned provider of blood management solutions has a market capitalization of $4.99 billion. The company projects 12% growth for the next five years and expects to maintain strong segmental performance. The company surpassed estimates in three of the trailing four quarters and missed estimates in the other one, the average positive surprise being 16.9%.
Let’s delve deeper.
Impressive Q4 Results: Haemonetics’ fourth quarter fiscal 2020 results reflected benefits from complexity reduction initiatives, operational excellence program product mix and pricing structure. Further, sustained underlying demand for plasma-based medicines and continued momentum in new business generation and geographical expansion contributed to results despite the challenges posed by the outbreak. Hospital segment saw new product launches and strong sales execution.
Expansion of both margins is encouraging as well.
Upside Potential of Plasma Franchise: We are upbeat about Haemonetics’ Plasma segment (company’s largest business segment), which has been witnessing strong growth for quite some time. In the fiscal fourth quarter, the segment grew 11.7% on an organic basis on 12.5% growth in North America, including 11.8% growth in disposables. The upside primarily resulted from favorable volume and price. Notably, impact of the coronavirus pandemic was limited to disposable sales in the final two weeks of the quarter in North America and Europe.
Japan continued to experience strong sales of plasma products as the company increased and maintained share due to technological issues with a competitor device.
Acquisitions and Collaborations: We are optimistic about Haemonetics’ recent acquisitions and collaborations. It recently inked a definitive agreement to sell its manufacturing operations in Fajardo, Puerto Rico, to GVS, S.p.A (a provider of advanced filtration solutions for critical applications).
Haemonetics also acquired enicor GmbH, a Germany-based privately held manufacturer of a new-generation whole blood coagulation testing system called ClotPro.
Downsides
Continued Fall in Blood Center Revenues: Haemonetics has been witnessing sluggish revenue growth at its Blood Center franchise, due to several factors. The drop in revenues in the fiscal fourth quarter resulted from a fall in collection volumes in the regions of Asia, China, Korea and Japan where the coronavirus impact was pronounced. Whole blood revenues declined due to unfavorable order timing among the company’s distributors.
Competitive Landscape: Haemonetics operates in a very competitive environment, both for manual and automated systems, which has biggies like Medtronic. Slower-than-expected product adoption by customers, especially the American Red Cross, might dent the company’s revenues and profit.
Estimate Trend
Haemonetics has been witnessing a negative estimate revision trend for 2020. Over the past 60 days, the Zacks Consensus Estimate for its earnings has moved 14.8% south to $3.06.
The Zacks Consensus Estimate for its first-quarter fiscal 2021 revenues is pegged at $195.6 million, suggesting a 17.9% fall from the year-ago number.
Key Picks
Some better-ranked stocks from the broader medical space are Aphria Inc. , Illumina, Inc. (ILMN - Free Report) and QIAGEN N.V. (QGEN - Free Report) .
Illumina’s long-term earnings growth rate is estimated at 11%. The company presently has a Zacks Rank #2.
QIAGEN’s long-term earnings growth rate is estimated at 12.2%. It currently sports a Zacks Rank #1.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Here's Why You Should Hold on to Haemonetics Stock for Now
Haemonetics Corporation (HAE - Free Report) has been gaining on sustained underlying demand for plasma-based medicines and continued impetus in business generation. Its geographical expansion has also been impressive. Its better-than-expected revenues for Plasma business in the fourth quarter of fiscal 2020 buoy optimism. However, persistent fall in blood center revenues and a stiff competitive landscape are concerning.
Shares of the company have lost 7.8% in the past year versus the industry’s 0.2% fall and the S&P 500’s 10.5% rise.
The renowned provider of blood management solutions has a market capitalization of $4.99 billion. The company projects 12% growth for the next five years and expects to maintain strong segmental performance. The company surpassed estimates in three of the trailing four quarters and missed estimates in the other one, the average positive surprise being 16.9%.
Let’s delve deeper.
Impressive Q4 Results: Haemonetics’ fourth quarter fiscal 2020 results reflected benefits from complexity reduction initiatives, operational excellence program product mix and pricing structure. Further, sustained underlying demand for plasma-based medicines and continued momentum in new business generation and geographical expansion contributed to results despite the challenges posed by the outbreak. Hospital segment saw new product launches and strong sales execution.
Expansion of both margins is encouraging as well.
Upside Potential of Plasma Franchise: We are upbeat about Haemonetics’ Plasma segment (company’s largest business segment), which has been witnessing strong growth for quite some time. In the fiscal fourth quarter, the segment grew 11.7% on an organic basis on 12.5% growth in North America, including 11.8% growth in disposables. The upside primarily resulted from favorable volume and price. Notably, impact of the coronavirus pandemic was limited to disposable sales in the final two weeks of the quarter in North America and Europe.
Japan continued to experience strong sales of plasma products as the company increased and maintained share due to technological issues with a competitor device.
Acquisitions and Collaborations: We are optimistic about Haemonetics’ recent acquisitions and collaborations. It recently inked a definitive agreement to sell its manufacturing operations in Fajardo, Puerto Rico, to GVS, S.p.A (a provider of advanced filtration solutions for critical applications).
Haemonetics also acquired enicor GmbH, a Germany-based privately held manufacturer of a new-generation whole blood coagulation testing system called ClotPro.
Downsides
Continued Fall in Blood Center Revenues: Haemonetics has been witnessing sluggish revenue growth at its Blood Center franchise, due to several factors. The drop in revenues in the fiscal fourth quarter resulted from a fall in collection volumes in the regions of Asia, China, Korea and Japan where the coronavirus impact was pronounced. Whole blood revenues declined due to unfavorable order timing among the company’s distributors.
Competitive Landscape: Haemonetics operates in a very competitive environment, both for manual and automated systems, which has biggies like Medtronic. Slower-than-expected product adoption by customers, especially the American Red Cross, might dent the company’s revenues and profit.
Estimate Trend
Haemonetics has been witnessing a negative estimate revision trend for 2020. Over the past 60 days, the Zacks Consensus Estimate for its earnings has moved 14.8% south to $3.06.
The Zacks Consensus Estimate for its first-quarter fiscal 2021 revenues is pegged at $195.6 million, suggesting a 17.9% fall from the year-ago number.
Key Picks
Some better-ranked stocks from the broader medical space are Aphria Inc. , Illumina, Inc. (ILMN - Free Report) and QIAGEN N.V. (QGEN - Free Report) .
Aphria’s long-term earnings growth rate is projected at 24.6%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Illumina’s long-term earnings growth rate is estimated at 11%. The company presently has a Zacks Rank #2.
QIAGEN’s long-term earnings growth rate is estimated at 12.2%. It currently sports a Zacks Rank #1.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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