On Jun 26, we have updated our research report on Mindray Medical International Limited (MR). Sluggish purchasing and marketing activities in the healthcare sector of China continues to drag down the company’s sales.
MR posted a disappointing 34.0% fall in adjusted earnings per share to 33 cents for the 2014-first quarter from 50 cents a year ago and missed the Zacks Consensus Estimate by 3 cents.
Adjusted net earnings dipped 35.7% year-over-year to $38.5 million from $59.8 million in the first quarter of 2013. Reported earnings decreased 37.5% to 30 cents per share from 48 cents per share in the 2013-quarter or 37.9% to $35.6 million from $57.4 million in the year-ago quarter.
Net revenues grew 9.4% to $264.8 million, lying below the Zacks Consensus Estimate of $291 million. International revenues upped 13.9% to $148.9 million while revenues from China grew at a slower pace of 4.0% to $115.8 million due to sluggish purchasing and marketing activities in the healthcare sector.
Healthcare related reform measures in China have negatively impacted Mindray’s business by creating uncertainties, reducing demand for its products. Further, the company has traditionally generated a part of its domestic revenues from government tender sales. Tenders in China are a discretionary decision of the government and can vary from year to year.
However, MR continues to expect 2014 net revenues to grow at least 15% over 2013 based on strengths in Western Europe and some emerging markets as well as gradual improvement in China.
Currently, MR retains a Zacks Rank #3 (Hold). Some better-ranked stocks in the medical instruments industry include Alphatec Holdings, Inc. (ATEC), Luminex Corporation (LMNX), and Masimo Corporation (MASI). Alphatec and Luminex sport a Zacks Rank #1 (Strong Buy), while Masimo carries a Zacks Rank #2 (Buy).