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CareFusion falls as it cuts 2013 revenue outlook

NEW YORK (AP) -- Shares of CareFusion declined on Friday as the medical device maker's third-quarter revenue missed analysts' estimates and it lowered its full-year revenue forecast.

THE SPARK: For the third quarter, CareFusion reported adjusted earnings from continuing operations of 59 cents per share on revenue of $901 million. Analysts polled by FactSet expected earnings of 53 cents per share on revenue of $909 million.

Late Thursday the company said that it now expects fiscal 2013 revenue to be flat to down by a low single-digit percentage. This implies revenue of $3.6 billion or lower. CareFusion's prior guidance was for revenue to climb 1 percent to 3 percent.

Analysts polled by FactSet expect revenue of $3.66 billion.

CareFusion still anticipates full-year adjusted earnings from continuing operations in a range of $2.11 to $2.21 per share. Wall Street predicts earnings of $2.15 per share.

THE ANALYSIS: Amit Bhalla of Citi Investment Research said in a client note that quarterly revenue was hurt partly because hospitals delayed purchases. While there's still uncertainty as far as when hospital spending will start to improve, Bhalla said that CareFusion remains upbeat going forward because its competitive position is strengthening.

The analyst said that mergers and acquisitions may become bigger priorities in coming quarters as a way to speed up revenue growth. Bhalla said that with any potential transaction, CareFusion would probably concentrate on expanding its geographic reach, building scale and adding capabilities across its portfolio.

The analyst reiterated a "Buy" rating and $37 price target.

A spokeswoman for CareFusion said the company has been investing in its business over the past 18 months while also focusing on expanding its margins. Operating margins were 15 percent during the quarter and increased 140 basis points to 22.3 percent on an adjusted basis.

"Our results demonstrate the value of our balanced portfolio," she said in an emailed statement.

SHARE ACTION: CareFusion Corp.'s stock fell $1.06, or 3.1 percent, to $33.59. The shares have traded between $23.77 and $35.61 over the past year. For the year to date, the stock is up 17.5 percent.