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Hospira Inc. Message Board

  • snugly60031 snugly60031 Nov 8, 2006 10:06 AM Flag

    Disappointing Earnings

    For several quarters after the spin-off HSP delivered much better than expected earnings. Whether or not these results were the product of sandbagging is anyone's guess. HSP longs looked like geniuses. Recently, serial earnings disappointments must make longs reconsider wisdom of holding this stock. It should be clear that Abbott would never have spun off HPD if they thought this portion of their business would have continued to deliver good returns. HSP is in a commodity business, and must compete on price. The only way for the company to deliver the former level of profits is to maintain strict cost control and eliminate any waste. One thing HSP Management must unlearn is the Abbott model of overpaying for acquisitions.

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    • 2006 HSP highlights = 3 upgrades from analysts after 3 disappointing ERs:

      (1) Same day upgrade on 28-Feb-06 (when Q4 �05 ER was released) from Hold to Buy
      (2) Next day upgrade on 10-Aug-06 from Neutral to Overweight
      (3) Third day upgrade on 10-Nov-06 from Sell to Hold
      http://finance.yahoo.com/q/ao?s=HSP

      fyi �

      Hospira's Flatlining Sales
      By Brian Lawler at The Motley Fool
      November 9, 2006
      http://www.fool.com/News/mft/2006/mft06110947.htm?source=eptyholnk303100&logvisit=y&npu=y

      Lower sales, decreased gross margins, and higher costs are not a winning combination for any corporation. Combine a bad quarter with decreased revenue guidance and it's easy to see why shares of medical products supplier Hospira (NYSE: HSP) were down 12% yesterday.

      Hospira's sales declined 1.5% for the quarter due to unfavorable year-over-year comparisons, according to the company. This doesn't seem like much of an excuse to me, especially considering the fact that sales were flat in the third quarter of 2005 as well. Previously, the culprit for Hospira's declining revenues was decreased sales to its former corporate parent, Abbott Labs (NYSE: ABT), but this quarter, sales declined in its other segment as well. Here's a chart showing Hospira's stagnant overall sales growth in the past year:

      Sales*
      Y-O-Y Growth

      Q3 2006
      $646.6
      (1.5%)

      Q2 2006
      $671.1
      1.4%

      Q1 2006
      $664.3
      0.3%

      Q4 2005
      $646.2
      (7.7%)

      *in millions

      The upcoming fourth quarter isn't going to be any better, either, as Hospira revised its full-year 2006 sales downward, to be 1%-2% higher than 2005. And it's not like Hospira set the market on fire in 2005 either, with sales down 1% that year as well.

      If Hospira were trimming its expenses and becoming more efficient, then maybe a few quarters of flat sales would be acceptable, but gross and operating margins are falling as well -- down to 34% and 12%, respectively, as Hospira's margins on products sold to Abbott decline and SG&A expenses rise for no good reason. Adjusted earnings per share are still expected to come in at $1.97 to $2.02 for the year (slightly higher than 2005), but that's excluding such things as expenses related to becoming a stand-alone company.

      I think it's increasingly clear why Abbott spun out Hospira from its operations in 2004: to rid itself of a stagnating business segment. It's trading at 24 times its trailing earnings, paying no dividend, and with no expected sales growth in the foreseeable future; it's hard to get my heart pumping over shares of Hospira.

    • << One thing HSP Management must unlearn is the Abbott model of overpaying for acquisitions. >>
      Snug

      after that they would have to unlearn overpaying their piss-poor management. there is also a reason why many of hsp management are there -- some political and some because abt needed to unload them before they did more damage.

    • Here is a previous post for you it explains some of your questions.
      You will not see any selling until Hospira has completed the task Abbott labs created for!! After products and numbers os employees pensions have been purged to hospira then Hospira will fold or be merged or sold of in portions to not make Abbott accountable. This is the long term goal so keep your eye out.

      If you think this is not true why did Abbott purchase other HPD products after the spin off? Why did they freeze pensions for spin off people and tell them only after the spin off and the deal was done? Why is Hospira going to purchase a lame duck generic drug from Abbott with not much profit margin? A sale of the generic drug and Abbott already has a layoff plan in place if it happens!!

      How is that for a rumor of a sale or merger!!!

 
HSP
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