On Oct 7, 2015, we issued an updated research report on Massachusetts-based Haemonetics Corporation HAE – a provider of blood management solutions to blood and plasma collectors, hospitals and health care providers globally. The company is slated to release its second quarter fiscal 2016 report on Nov 4, 2015.
Of late, Haemonetics’ shares fell substantially following mixed preliminary results for its soon-to-be-reported second-quarter and reduced outlook for fiscal 2016. Haemonetics lowered its earlier provided guidance for both adjusted EPS as well as revenues. According to management, this trimmed outlook for full year fiscal 2016 was primarily driven by apprehensions of a disappointing revenue performance in the second half of fiscal 2016.
Moreover, since the fourth quarter of fiscal 2015, economic weakness in Russia has been consistently affecting Haemonetics’ financial results and growth outlook in the said market for fiscal 2016. In fact, declines in its Russian business adversely impacted the company’s earnings by 7 cents in fiscal 2015 and this trend is expected to continue through the first half of fiscal 2016. The company is currently working closely with Russian distributors to monitor market conditions and credit risk.
Further, loss of the American Red Cross Order and a tough competitive environment continued to weigh on the stock.
On a brighter note, the company continues to expect substantial growth in plasma, Thrombelastograph Hemostasis Analyzer (TEG) and emerging market in the second half of fiscal 2016. Haemonetics has decided to stop investing further in its strategic restructuring program – VCC (Value Creation and Capture), effective fiscal 2016. This will result in incremental cost savings worth approximately $14 million for the company.
Moreover, with the acquisition of the transfusion medicine business of Pall Corporation for $551 million, Haemonetics has made its entry into the $1.2 billion whole blood collection market. This was followed by the company’s acquisition of Hemerus Medical, a developer of technologies for the collection of whole blood. Haemonetics is optimistic about this acquisition and expects successful integration of the Hemerus SOLX collection system.
Currently, Haemonetics carries a Zacks Rank #5 (Strong Sell).
Key Picks in the Sector
Some better-placed medical products stocks are Enzymotec Ltd. ENZY, ICU Medical, Inc. ICUI and NuVasive, Inc. NUVA. All three stocks sport a Zacks Rank #1 (Strong Buy).
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