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Fresenius Medical (FMS) Well Poised on Growth Strategy 2020

Zacks

On Jul 11, we issued an updated research report on Bad Homburg, Germany-based Fresenius Medical Care FMS, one of the largest integrated providers of products and services for individuals undergoing dialysis following chronic kidney failure. The stock has a Zacks Rank #2 (Buy).

Fresenius Medical has chalked out a long-term plan called the ‘Growth Strategy 2020’ to formulate a few initiatives for gaining solid market traction over the long haul.

Per the postulates of Growth Strategy 2020, Fresenius Medical aims to increase revenues to $28 billion by 2020, reflecting an average annual growth rate of around 10%. In full-year 2016, revenues increased 7% on a year-over-year basis, courtesy of strong growth in Health Care Service revenues. Furthermore, management forecasts an increase in revenues through both organic and inorganic growth.

In addition to the stock’s strong performance in its core dialysis business, Fresenius Medical intends to achieve its targets by expanding its Care Coordination (non-dialysis segment) as well.


Coming to product lines, Fresenius Medical manufactures a variety of durable medical devices used in the treatment of End Stage Renal Disease (ESRD). Devices like Hemodialysis Machines, Peritoneal Dialysis Machines, Granuflo Concentrate Mixing Tanks and monitoring devices like the Crit-line platform are part of its portfolio.

Fresenius Medical provides a wide range of dialysis products in its clinics and to third parties. These include modular machine components, dialyzers, bloodline systems, HD (hemodialysis) solutions, concentrates and water treatment systems.

Acquisitions have been driving the company’s growth trajectory for long. Of the major ones, the buyouts of Cura Group, XENiOS AG, Renal Care Group, Renal Solutions, Liberty Dialysis and Sparsh Nephrocare deserve a special mention. In 2016, the company made acquisitions worth $367 million.

On the flipside, Fresenius Medical has had an unimpressive run on the bourse year to date. The stock has gained 13.5%, lower than the Zacks categorized Medical instruments sub-industry’s addition of almost 16.3%.

Other Key Picks

A few other top-ranked stocks in the broader medical sector are Edwards Lifesciences Corporation EW, CryoLife, Inc. CRY and Edap Tms S.a. EDAP. Notably, Edwards Lifesciences and Edap sport a Zacks Rank #1 (Strong Buy), while CryoLife has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. Notably, the stock represents an impressive one-year return of 10.4%.

CryoLife yielded a strong return of 4.5% over the last one month. The stock delivered a positive earnings surprise of 80% in the last reported quarter.

Edap Tms represents an impressive return of 22.8% for the last three months. The company delivered a solid earnings surprise of 533.3% in the last reported quarter.

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