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Haemonetics' Plasma Unit Grows, Global Expansion on Track

Zacks Equity Research

On Mar 11, we issued an updated research report on Haemonetics Corporation HAE. The company has been witnessing strong growth in Plasma and Hemostasis Management units for quite some time now. The stock currently carries a Zacks Rank #3 (Hold).

Shares of this leading provider of hematology products and solutions have outperformed its  industry over the past year. The stock has rallied 17.4% compared with the industry's growth of 4.6%.

Notably, Haemonetics exited third-quarter fiscal 2019 on a promising note. Per the company, benefits from complexity reduction and investments along with strength in market demand and success from early launches helped the company perform impressively. Continued momentum in new business generation and a consistent geographical expansion contributed to better results.

Meanwhile, we are upbeat about the company’s steady progress with the ongoing rollout of NexSys PCS devices and NexLynk DMS donor management software.

Haemonetics Corporation Price

Haemonetics Corporation Price | Haemonetics Corporation Quote

Haemonetics' Plasma arm witnessed steady growth in the fiscal third quarter on a 16% rise in revenues at constant currency. In the reported quarter, North America Plasma revenues increased 20.7%, led by strength in disposables along with the growing software revenue stream.

Going forward, Haemonetics expects to retain growth in the commercial Plasma collection business.  Accordingly, the company had earlier raised its fiscal 2019 guidance for Plasma revenue growth to 14-16% (from 7-10% issued earlier). Per management, Plasma revenue outlook also includes 17-19% rise in North America.

Haemonetics also continues to make investments in expanding its disposable capacity. During the quarter under review, the company finished validation of its new bottle line. Per management, the company is on track to complete and validate its new bowl line by the end of the current fiscal year. Together, all these are expected to raise Haemonetics' disposable capacity by 50%.

Moreover, the fiscal 2019 view looks promising. Additionally, the company's solid cash position boosts investors' confidence in the stock.

However, we are disappointed with the fact that despite generating encouraging growth at the Plasma and Hospitals segments, Haemonetics' sluggish Blood Center business moderated overall growth in the reporting cycle.

Key Picks

A few better-ranked stocks in the broader medical space are ABIOMED, Inc., ABMD, Penumbra, Inc. PEN and Masimo, Inc. MASI, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ABIOMED’s long-term earnings growth rate is expected at 27.67%.

Penumbra’s long-term earnings growth rate is projected at 20.93%.

Masimo’s long-term earnings are forecast at 15.60% growth.

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