Haemonetics: Q4 Hit By Issues In Russia, Currency Woes Stay

On Jun 9, we issued an updated research report on Braintree, MA-based Haemonetics Corporation (NYSE:HAE) , a global provider of blood management solutions to customers encompassing blood and plasma collectors, hospitals and health care providers. The company currently carries a Zacks Rank #5 (Strong Sell).

Haemonetics posted a dismal fourth-quarter fiscal 2016 with both EPS and revenues failing to meet the Zacks Consensus Estimate. The year-over-year decline in earnings also adds to the disappointment. Unfavorable foreign currency fluctuations primarily played spoilsport.

Over the last couple of years, economic turmoil in Russia has been hampering Haemonetics’ performance in emerging markets significantly. While the need for Haemonetics’ products in Russia continues due to reduced government healthcare spending, the company’s distributors are placing fewer orders and maintaining low inventories.

As a result, in the first three quarters of fiscal 2016, the company generated $13 million of revenues in Russia, down 40% on a year-over-year basis because of economic and political uncertainties.

Moreover, a stronger dollar caused significant currency fluctuations, affecting the company over the past few quarters.

Haemonetics operates in a very competitive environment, both for manual and automated systems, which includes companies like Baxter, Abbott and Medtronic (NYSE:MDT) among others. Slower-than-expected product adoption by customers, especially the American Red Cross, might dent the company’s revenues and profits.

On a brighter note, post the recent launch of its next generation plasma collection software, Haemonetic’s new collection device is on track for commercial launch in early fiscal 2018. Also, management recently noted a slowdown in the declining rates of the US Red cell transfusion, which might boost the company’s whole blood revenues.

Key Picks in the Sector

Better-ranked medical stocks are Baxter International Inc. (NYSE:BAX) , Boston Scientific Corporation (NYSE:BSX) and LeMaitre Vascular, Inc. (NASDAQ:LMAT) . All the three stocks carry a Zacks Rank #2 (Buy).