On Mar 14, 2014, we issued an updated research report on Pall Corp. (PLL). The company had earlier reported better-than-expected quarterly results. Moreover, despite economic headwinds in some of Pall's industrial end-markets, the company reported profits attributable primarily to improved operational execution and favorable impact of structural cost actions.
Pall has delivered positive earnings surprises in each of the last 4 quarters, with an average beat of 1.90%. Moreover, Pall delivered robust earnings in the second quarter of fiscal 2014, which not only surpassed the Zacks Consensus Estimate but also increased 12% on a year-over-year basis.
Following its second-quarter earnings results, Pall narrowed the upper end of its earnings guidance for fiscal 2014 to include the acquisition cost of ATMI LifeSciences and the negative impact of foreign currency translation. It now expects pro forma earnings per share (EPS) to lie in the range of $3.35 to $3.45. Earlier, the company had expected fiscal 2014 EPS to grow in the range of approx. $3.31 to $3.50 a share (9–15% over $3.04 EPS reported for fiscal 2013).
The company’s cost-cutting and restructuring initiatives are reaping expected benefits. It implemented measures like staff reduction and revamping the product portfolio across all its businesses, especially its LifeSize business which is showing a healthy improvement earlier than expected.
Pall Corp. enjoys remarkable financial returns and reasonable growth prospects due to several factors, including its superior technology, reliable global distribution and notable acquisition strategy, high share in market niches, long and close working histories with customers, few competitors and solid product quality supplemented by technical services.
The company’s biopharmaceutical business is expected to grow significantly in the long run driven by increased funding in biotechnological research, rising demand for single-use and disposable products and an increasing number of drugs and vaccines getting approved over time. Pall’s recent acquisition of ATMI LifeSciences business is a strategic move as it complements Pall’s existing Life Sciences segment business. It supports Pall’s current offering and broadens its already extensive portfolio of advanced solutions for biopharmaceutical customers.
However, the volatility of foreign currency and uncertain global market conditions remain headwinds for this company.
Pall currently carries a Zacks Rank #3 (Hold).
Key Picks from the Sector
Other stocks that are worth considering in this sector are Sharps Compliance Corp. (SMED) with a Zacks Rank #1 (Strong Buy), Tetra Tech Inc. (TTEK) and Pure Cycle Corp. (PCYO), carrying a Zacks Rank #2 (Buy).