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CareFusion Reaches a New 52-Week High

Zacks Equity Research

Riding on a steady growth momentum, shares of CareFusion Corporation (CFN) reached a new 52-week high of $44.29 in mid-day trading on Jun 20. Shares of the company closed marginally lower at $44.24 on the same day, translating to a healthy one-year return of 22.4%.

CareFusion has a market cap of $9.17 billion while average volume of shares traded over the last three months stands at approximately 1.7 million.

Shares of this global medical technology company have been on the rise since it reported strong third-quarter fiscal 2014 (ended Mar 31, 2014) results on May 5. More recently, CareFusion launched several new products including the new micro-laparoscopic line of surgical instruments – MicroLap. It has also made additions to its ChloraPrep line of preoperative skin preparation products and its proprietary portfolio of needleless connectors.

In the third quarter of 2014, CareFusion posted adjusted earnings per share of 60 cents, exceeding the year-ago level of 59 cents by 1.7%. Reported earnings per share grew 29.7% to 48 cents from 37 cents a year ago.

Revenues in the quarter rose 7.4% (both in reported and constant currency) to $968 million, driven by strength in the Procedural Solutions segment. Revenues from this segment rose 25.2% to $397 million, led by gains from its clinically differentiated portfolio and contributions from recent acquisitions.

CareFusion upgraded its revenue growth guidance for fiscal 2014 to 5–7% from 4–7%, on a constant currency basis. The guidance for organic revenue growth was raised to 2–4% from the prior outlook of 1–4%, on a constant currency basis.

Adjusted earnings are expected to lie in the previously guided range of $2.30 to $2.40 per share for the fiscal year. The current Zacks Consensus Estimate for the same stands at $2.31.

In the first nine months of fiscal 2014, cash flow from operating activities rose 7.1% to $455.0 million. CareFusion raised its cash flow guidance to $550 million to $600 million from the previous range of $500 million to $550 million for the full fiscal year.

Currently, CareFusion carries a Zacks Rank #3 (Hold). Better-ranked stocks in the medical products industry include Cardica Inc. (CRDC), ICU Medical, Inc. (ICUI) and NeuroMetrix Inc. (NURO). All these stocks carry a Zacks Rank #2 (Buy).

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