Shares of Haemonetics Corporation (HAE) have been on the rise since it detailed its key growth initiatives at a healthcare conference on Jan 9, 2013. It culminated with the company hitting its all-time high of $43.38 on Jan 18. In addition, this Zacks Rank #1 (Strong Buy) provider of blood management solutions surprised by 18.4% in its second quarter and has a long-term expected earnings growth rate of 12.3%.
Rank Drivers
Haemonetics believes that fiscal 2013 is likely to be a ground breaking year based on several growth factors, including the acquisition of the transfusion medicine business of Pall Corporation (PLL) in August 2012, the limited market release of the paperless phlebotomy offering by the end of the fourth quarter of fiscal 2013 and its emerging-market growth initiatives with a primary focus on China.
Additionally, the company’s robust results for the second quarter of fiscal 2013 remain noteworthy. On Oct 29, 2012, Haemonetics reported adjusted earnings per share that surpassed the Zacks Consensus Estimate by more than 18%. Revenues increased 22% year over year to $218.2 million. Also, after taking into account the newly added whole blood business, the company recorded organic net revenue of $189.6 million, up 6% year over year.
The company will report again on January 30. The Zacks Consensus Estimate is currently at 47 cents per share.
Earnings Estimates
The Zacks Consensus Estimate for fiscal 2013 has increased 1.8% over the past 90 days to $1.69 per share, representing year-over-year growth of about 11.23%. Meanwhile, the Zacks Consensus Estimate for 2014 is at $2.02, indicting year-over-year growth of about 19.31%.
Premium Valuation
Haemonetics’ valuation looks stretched compared with its peers by most metrics. The company is currently trading at a forward P/E of 25.66x, which is almost a 10.94% premium to the peer group average of 23.13x. The price-to-book ratio of 2.88x is also 28.57% higher than the peer group average of 2.24x. Similarly, the price-to-free-cash-flow ratio is significantly higher at 67.16x, compared with the peer group average of 31.96x. The premium ratios are warranted, given its solid second-quarter results and huge growth prospects.
Haemonetics’ price performance has been reasonably strong, especially following the release of its fiscal second-quarter results. The stock is currently trading above both its 50- and 200-day averages.
Haemonetics provides blood management solutions to customers encompassing blood and plasma collectors, hospitals and health care providers globally. The company’s portfolio of integrated devices, information management, and consulting services offers blood management solutions for each facet of the blood supply chain, helping better clinical outcomes. The company has a market capitalization of $2.24 billion.
Other Zacks Rank #1 (Strong Buy) medical devices stocks include Qiagen NV (QGEN) and MedAssets, Inc. (MDAS).
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