Shares of Alere Inc. ALR reached a new 52-week high of $51.53 on May 22. The new high represents a strong one-year return of about 35%. In comparison, the S&P 500 jumped almost 3.3% during the same period.
It appears that a string positive news in the past couple of months are working in favor of the company, propelling investor confidence in the stock.
This Zacks Rank #2 (Buy) stock has a market cap of $4.36 billion and a long-term expected earnings growth rate of 15%.
Key Growth Catalysts
Divesture of Analytics Division
On May 22, the company’s Analytics segment was acquired by Persivia, a company known for its medicine and chronic care management solutions. We feel, by divesting its non-core assets, Alere will not only increase scope for profitability but also ensure more focus on developing its core operations.
Earnings Beat
On May 5, 2015, Alere recently reported first-quarter results, wherein earnings surpassed the Zacks Consensus Estimate on the back of cost curtailment initiatives and continuing divestment of non-core assets.
Lower research and development (R&D) and selling, general and administrative (SG&A) expenses suggest the company’s cost control plans are in place. In fact, lower expenditure helped offset a decline in net revenues and improve bottom-line growth.
FDA Clearance
We are also impressed with the company’s rapidly expanding assay portfolio. Last month, Alere received the FDA clearance for its Alere i Strep A test. Alere i Strep A is reportedly the first molecular test that can detect Group A Streptococcus (GAS) bacteria in throat swab specimens in 8 minutes or less. We feel that a promising test portfolio will help Alere gain better market traction, going forward.
Estimate Revisions
Over the past 30 days, the Zacks Consensus Estimate for 2015 has increased 3.1% to $2.34 per share, which reflects 32.9% year-over-year growth. Likewise, the estimate for 2016 has inched up 0.4% to $2.62 over the same time frame, exhibiting 11.9% growth on a year-over-year basis.
Stocks to Consider
Better-ranked medical stocks at the current moment include AMN Healthcare Services AHS, Cancer Genetics CGIX and INC Research Holdings INCR. All the stocks sport a Zacks Rank #1 (Strong Buy).
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