Hospira (HSP) has been facing manufacturing issues at many of its manufacturing facilities. Until fully resolved, these challenges will continue to hurt the stock.
The latest manufacturing issue at Hospira emerged last week when the FDA issued a warning letter to the company following an inspection of the company’s pharmaceutical manufacturing facility located in Mulgrave, Victoria, Australia. The company’s shares lost 0.5% following the announcement on Oct 1 to close the trading session on that day at $51.78. Shares have been on a roller coaster ride in the following two trading sessions.
Hospira stated that the inspection of the Australian facility took place from Feb 24, this year through Mar 1. The facility is responsible for producing part of the specialty injectable pharmaceutical (SIP) offerings at Hospira.
Hospira believes that the warning letter will not impact its financial projection for 2014. The company still expects adjusted diluted earnings per share in the range of $2.30 to $2.50. The Zacks Consensus Estimate for 2014 currently stands at $2.38 per share.
However, additional manufacturing issues at the facility might invite stricter action from the FDA. This will hurt Hospira badly as the SIP segment contributes majority of the revenues generated at the company.
During the second quarter of 2014 Hospira enjoyed some relief when the FDA came up with no observations after re-inspecting the company’s Rocky Mount manufacturing facility. This is an important milestone for Hospira, which will allow the company to start producing at the pre-shortage.
However, issues at many other manufacturing facilities, such as the one at Vizag, remain unresolved. The warning letter pertaining to the Australian facility has added to the company’s list of challenges which it needs to overcome.
Hospira carries a Zacks Rank #3 (Hold). Better-ranked stocks in the medical sector include ICU Medical (ICUI), Abaxis (ABAX) and Alere (ALR). While ICU Medical carries a Zacks Rank #1 (Strong Buy), Abaxis and Alere are Zacks Ranked #2 (Buy) stocks.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment