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Hill Rom Impresses with Q2 Results, Strategic Initiatives


On May 18, we issued an updated research report on Hill Rom Holdings, Inc. HRC. The stock currently has a Zacks Rank #2 (Buy).

Hill-Rom posted stellar second-quarter fiscal 2017 results with earnings and revenues exceeding the respective Zacks Consensus Estimate. The company saw solid year-over-year increase in revenues on strong international growth. Management is currently looking to gain traction in this huge international market, courtesy of its efficient international team and organizational realignment.

Hill-Rom Holdings Inc Price

Hill-Rom Holdings Inc Price | Hill-Rom Holdings Inc Quote

This apart, Hill-Rom’s merger and acquisition pipeline remains robust. The company aggressively pursues acquisitions to accelerate growth in five key clinical focus areas viz. advancing patient mobility, wound care and prevention, surgical, safety and efficiency, clinical workflow solutions and respiratory help.

Recently, the company completed the acquisition of Mortara Instrument for $330 million in cash. Per management, the buyout has been a significant contributor to Hill-Rom’s fiscal second quarter results. The acquisition accelerated revenue growth and is expected to strengthen Hill-Rom’s Front Line Care business. The deal is also expected to generate approximately $10 million in annualized cost synergies over the next two years.

We are also encouraged by Hill-Rom’s consistent focus on expansion through product development. This is reflected in the rise in its research and development spending. During the fiscal second quarter, Hill-Rom launched a cost-efficient TruSystem 3000 Mobile Operating Table for international markets under its Surgical Solutions portfolio. The company also saw a record number of placements of the Integrated Table Motion for the da Vinci Xi Surgical System in the reported quarter, driving Surgical Solutions business performance. Per management, the company is presently creating value with new products which contributed to revenue growth in the quarter.

This overall bullish trend is reflected in company’s share price performance which has been trading above the broader Medical – Products industry over the last three months. The stock has to date rallied 14.1% compared with the industry's gain of 4.1%.

Key Picks

Some other stocks worth considering in the broader medical sector include Luminex Corporation LMNX, Hologic, Inc. HOLX and Edward Lifesciences, Inc. EW. Notably, Luminex sports a Zacks Rank #1 (Strong Buy), while Hologic and Edward Lifesciences carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Luminex has an expected long-term adjusted earnings growth of almost 16.3%. The stock added roughly 17.0%, 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 30.5%.

Edward Lifesciences recorded a stellar EPS growth rate of almost 16% (last three to five years of actual earnings).

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