Haemonetics Plasma Arm Grows Strong, Blood Center Sluggish

On Aug 16, we issued an updated research report on Haemonetics Corporation (NYSE:HAE) , a Braintree, MA-based leading provider of blood management solutions to customers encompassing blood and plasma collectors, hospitals and health care providers globally. The stock currently carries a Zacks Rank #3 (Hold).

For the past six months, Haemonetics has been trading above the broader industry. The stock till now has rallied 14.1% compared with the broader industry’s 11.7% increase.

The company exited first-quarter fiscal 2018 on a mixed note, with earnings beating the Zacks Consensus Estimate but revenues missing the same. However, the year-over-year increase in reported sales and gross margin buoys optimism. Market is also upbeat about Haemonetics’ encouraging growth in both Plasma and Haemonetics Management franchises. The company swung to operating income in the first quarter of fiscal 2018 from losses in the year-ago quarter.

Haemonetics has been witnessing a strong flourish in its Plasma franchise for quite some time now. Management has also maintained high confidence in the continued growth of its commercial plasma collection business.In the quarter, North America Plasma disposables revenues increased 6%. Growth continued to be led by a strong end-market demand for plasma-derived biopharmaceuticals.

The company’s Hospital business is also progressing well. The TEG line of products has gained popularity worldwide. The TEG 5000 is approved of for a broad set of indications in all its top markets. The TEG 6s and TEG Manager are sanctioned for the same set of indications across Europe, Australia and Japan.

On the flip side, the company has been witnessing sluggish revenue growth at the Blood Center franchise, significantly affecting Haemonetics’ 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 a stiff competition continue to hamper the stock.

Other Key Picks

A few better-rankedmedical stocks are Edwards Lifesciences Corp. (NYSE:EW) , Steris Plc (NYSE:STE) and Align Technology, Inc. (NASDAQ:ALGN) . Edwards Lifesciences and Align Technology sport a Zacks Rank #1 (Strong Buy), while Steris carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Edwards Lifesciences’ second-quarter 2017 adjusted earnings surged a stupendous 42.1% year over year, primarily driven by strong sales growth at the company’s transcatheter heart valves business. The stock has gained around 0.9% over the last three months.

Steris reported first-quarter fiscal 2018 adjusted earnings per share of 85 cents, up 7.6% from the year-ago quarter. Also, adjusted gross margin improved 410 basis points year over year to 42.3% in the reported quarter. The stock has gained 13.1% over the last three months.

Align Technology’s second-quarter 2017 adjusted EPS of 85 cents were up a substantial 37.1% year over year. Revenues climbed 32.3% year over year to $356.5 million. The stock has rallied roughly 25.4% over the last three months.

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