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Haemonetics (HAE) Grows on Strong Plasma, Competition Rife

Zacks

On Nov 14, we issued an updated research report on Haemonetics Corporation HAE. The company has been trading above the broader industry over the last month. The stock has gained 19.9% as against the broader industry’s 0.5% gain. The stock has also outperformed the S&P 500’s 1.2% gain. The stock currently carries a Zacks Rank #3 (Hold).

Haemonetics exited second-quarter fiscal 2018 on a promising note, with year-over-year growth in earnings and revenues. Continued expansion in newer geographies has helped the company deliver strong results in the recent past. Meanwhile, the company’s strong cash position boosts investors’s confidence. The company is also optimistic about strong market adoption of its NexSys PCS plasmapheresis system which recently received FDA approval. Further, the raised fiscal 2018 adjusted earnings guidance is encouraging.

Market is upbeat about Haemonetics’ encouraging growth in both Plasma and Haemonetics Management franchises. Plasma continued to witness strong growth in the second quarter with 5.7% rise in revenues at constant currency. In the quarter, North America Plasma disposables revenues increased 7%. Growth continued to be led by strong end-market demand for plasma-derived biopharmaceuticals. Haemonetics is confident about maintaining growth in the commercial Plasma collection business.


On the flip side, the company has been witnessing sluggish revenue growth at the Blood Center franchise, significantly affecting its results over the past few quarters. Management also doesn’t expect any early recovery in the Blood Center’s outcomes.

Macroeconomic uncertainty continues to pose a challenge for Haemonetics. Management also anticipates slower-than-expected product adoption by customers which might reduce revenues and profits. Also, currency fluctuations and stiff competition continue to hamper the stock. Contraction in gross and operating margin is also discouraging.

Key Picks

A few better-ranked medical stocks are PetMed Express, Inc. PETS, Align Technology, Inc. ALGN and Myriad Genetics, Inc. MYGN. Notably, PetMed, Align Technology and Myriad Genetics sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PetMed has a long-term expected earnings growth rate of 10%. The stock has rallied roughly 71.8% over the last year.

Align Technology has a long-term expected earnings growth rate of 28.9%. The stock has gained 170.1% in the last year.

Myriad Genetics has a long-term expected earnings growth rate of 15%. The stock has gained 87.1% in the last year.

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