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Halyard Health Announces New Drainage System, Stock Down

Zacks

Alpharetta, GA-based Halyard Health HYH, a leading medical technology company, recently announced the availability of the Halyard Enteral Drainage System, a significant addition to the company's comprehensive portfolio of enteral feeding products.

The Halyard Enteral Drainage System is a closed system for the drainage and collection of gastrointestinal tract contents from patients using an enteral device. In this regard, enteral feeding refers to the delivery of complete food, containing protein, carbohydrate, fat, water, minerals and vitamins, directly to the stomach.


Per management, the Halyard Enteral Drainage System provides tools to caregivers for eradicating the usage of non-enteral drainage products (such as urinary bags).

The Halyard Enteral Drainage System includes a drainage bag and connective tubing and leverages on the company’s earlier acquisition of CORPAK in 2016. The system is available for use in the markets.

Share Price Trend

Shares of Halyard Health have lost 2.7% to close at $35.52 following the news release. In fact, the company has had a disappointing run on the bourse over the last one year.

Halyard Health lost roughly 13.4%, comparing unfavorably with the Zacks categorized Medical instruments sub-industry’s addition of almost 4.6%. However, a long-term expected earnings growth rate of 7.7% instills confidence in investors.

The estimate revision for the stock has been unfavorable. The current quarter has seen three estimates move south over the last two months, compared to no movement in the opposite direction. As a result, earnings per share estimates for the current quarter declined by 4 cents to 39 cents over the same time frame.

Halyard Health carries a Zacks Rank #3 (Hold).

Bottom line

The acquisition of CORPAK has been a strategic fit for Halyard Health. The company leverages on CORPAK’s technology to enhance its digestive business segments, especially the abdomen and nasal gastric feeding.

Focusing on the latest development, lucrative prospects in the global enteral feeding devices market are likely to bolster the company’s foothold. Data from the Markets And Markets reveal that the markets are expected to rach a worth of $ 2.8 billion by 2021, multiplying at a CAGR of 5.5%.

Key Picks

Better-ranked stocks in the broader medical sector include Luminex Corporation LMNX, Hologic, Inc. HOLX and Inogen Inc INGN. Notably, Inogen and Luminex sport a Zacks Rank #1 (Strong Buy), while Hologic carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Inogen promises a long-term adjusted earnings growth of almost 17.5%. The stock returned 81.2% over the last one year.

Luminex has an expected long-term adjusted earnings growth of almost 16.3%. The stock added roughly 14.6% over the last three months.

Hologic has a long-term expected earnings growth rate of 11.33%. The stock has a solid one-year return of roughly 28.8%.

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