Haemonetics Corporation HAE has been gaining investor confidence on continued positive results. Over the past year, the company’s share price has outperformed its industry. The stock has gained 74.7% against the industry’s 1.8% fall. Also, the company has outperformed the S&P 500’s 2.7% decline.
This renowned global provider of blood management solutions to customers encompassing blood and plasma collectors and hospitals has a market cap of $5.32 billion. The company has an earnings growth rate of 12.5% for the next three to five years.
With solid prospects, this Zacks Rank #2 (Buy) stock is an attractive pick for investors at the moment.
What Makes the Stock an Attractive Pick?
Potential Upside of Plasma Franchise
Haemonetics has been witnessing strong growth in Plasma franchise for quite some time. Plasma continued to witness strong growth in the fiscal second quarter on a 13.3% rise in revenues at constant currency. In the quarter, North America Plasma revenues increased 17% led by strength in disposables along with growing software revenues.
Haemonetics expects to maintain growth in the commercial Plasma collection business and has raised the fiscal 2019 guidance for revenue growth to 14-16% (7-10% stated earlier).
Huge Potential of Hemostasis Management Franchise
Under Hospital business, Hemostasis Management saw strong growth in the past few quarters. Also, TEG has become the global leader in Hemostasis Management led by solid disposable growth and higher TEG success capital sales.
During the first quarter, Haemonetics launched a product line extension, namely, TEG Manager 4.0, a software solution with a new feature called the interpretation guidance module.
The TEG 6s product offering contributed significantly to Hemostasis’ revenues in fiscal 2018. The company witnessed double-digit sales growth in both TEG 5000 and TEG 6s disposables and above 20% growth in major TEG markets of North America, China and Europe, Middle East and Africa in the fiscal second quarter.
Strong Balance Sheet
Haemonetics exited the second quarter of fiscal 2019 with cash and cash equivalents of $199.8 million compared with $192.1 million at the end of the first quarter of fiscal 2019.
The company generated operating cash flow of $80.5 million in the first six months of the fiscal compared with $97.3 million a year ago. The company also reported free cash flow (before restructuring and turnaround costs) of $20.8 million during the same period compared with $75.3 million a year ago. Capital expenditures totaled $75.3 million in this period, higher than $27.8 million a year ago.
Other Key Picks
Other top-ranked stocks in the broader medical space are Integer Holdings Corporation ITGR, Surmodics, Inc. SRDX and Veeva Systems VEEV.
Veeva Systems’ long-term earnings growth rate is estimated at 19.5%. The stock carries a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here .
Integer Holdings, with a Zacks Rank #2, has an earnings growth rate of 31.2% for the first quarter of 2019.
Surmodics’ long-term earnings growth rate is projected at 10%. The stock carries a Zacks Rank of 2 currently.
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