GIVN Given Imaging Ltd. - Ordinary Shares (MM)

Haemonetics Back to Neutral

On Apr 11, we downgraded Haemonetics Corporation (HAE) back to our Neutral recommendation. In spite of huge growth prospects including the company’s recent entry in the $1.2 billion whole blood collection market, the share price already reflects the positive events and we do not see any catalysts to drive further upside. Moreover, we are concerned with the uncertain economic scenario, which continues to pose challenges for this Zacks Rank #2 (Buy) stock.

Why back to Neutral?

Haemonetics reported a mixed third quarter with adjusted EPS of 50 cents, surpassing both the Zacks Consensus Estimate of 47 cents and the year-ago earnings of 43 cents. Although revenues increased 31% year over year at CER to $247.4 million, it failed to meet the Zacks Consensus Estimate of $252 million.

Even though margin improvement took place during the quarter, the uncertain economic scenario continues to pose a challenge for Haemonetics. Despite the economic challenges, the company continued to enhance its blood management solutions. Although the gradual recovery in the economy has resulted in an uptrend in IMPACT sales, any hurdle in the recovery process might hamper the growth prospects.

With the acquisition of the transfusion medicine business of Pall Corporation for $551 million, Haemonetics forayed into the $1.2 billion whole blood collection market. Moreover, the company’s focus on emerging markets is yielding results as China continues to register strong growth. Revenue from this region is expected to accelerate over the forthcoming period.

Other stocks worth a look

Apart from Haemonetics, other stocks in the MedTech sector that are currently performing well include Given Imaging (GIVN), Medical Action Industries Inc. (MDCI) and Cyberonics Inc. (CYBX). All these companies carry a Zacks Rank #1 (Strong Buy).

 
CYBERONICS INC (CYBX): Free Stock Analysis Report
 
GIVEN IMAGING (GIVN): Free Stock Analysis Report
 
HAEMONETICS CP (HAE): Free Stock Analysis Report
 
MEDICAL ACTION (MDCI): Free Stock Analysis Report
 
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