Manufacturer and marketer of medical devices, Mindray Medical International Limited (MR), has announced preliminary results for full year 2014 and also provided guidance for the current year.
For 2014, Mindray Medical expects net revenue to increase approximately 8.6% on a year-over-year basis to $1.32 billion, in line with the current Zacks Consensus Estimate.
Based on the estimated revenue figure, management expects non-GAAP net income to decline 7.2% to $220 million in 2014. The non-GAAP net income does not however include the tax benefits associated with the key software enterprise status. Also, it surmises a corporate income tax rate of 15% pertinent to the Shenzhen subsidiary.
For full year 2015, Mindray Medical expects its net revenue to increase by a mid-single digit percentage on a year-over-year basis.
The projected revenue upside can be primarily attributed to strong sales growth from the Western Europe region. The region has been consistently delivering double digit sales growth, mainly on the back of sales from France, Italy and Spain.
Mindray Medical’s revenue growth can also be seen as result of increased sales of IVD (In-Vitro Diagnostic) products. In addition, higher sales of reagents have been specifically instrumental in driving the upside.
Despite the positives, the macro trends have not been quite helpful for Mindray Medical. The company expects these to impact financials in 2015 as well. Moreover, Mindray Medical has been facing challenges in the sluggish Chinese market. Although China performed better in the third quarter of 2014 relative to the first two, management is uncertain whether this trend will sustain over the long term.
In addition, currency fluctuations and political tensions have been hurting Mindray Medical to a major extent. Due to an unfavorable foreign exchange rate, the company faced challenges from Indonesia and Argentina. Business in Venezuela and Russia was also sluggish due to rising political tensions weighing on the entire bulk of economic activities.
However, Mindray Medical remains focused on expanding its core capabilities through innovative product launches. Over the past year, the company has unveiled nine products. Management plans to introduce seven to ten additional products in the current year, apart from working on its long-term growth agenda by spending heavily on R&D, sales, marketing and distribution capabilities.
Zacks Rank
Currently, Mindray Medical carries a Zacks Rank #3 (Hold). Better-ranked stocks in the medical instruments industry include Inogen (INGN), Synergetics USA (SURG) and ABIOMED (ABMD). While Inogen and Synergetics USA sport a Zacks Rank #1 (Strong Buy), ABIOMED carries a Zacks Rank #2 (Buy).
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