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Here's Why You Should Invest in Fresenius Medical Stock Now

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Zacks Equity Research
·4 min read
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Fresenius Medical Care AG & Co. KGaA FMS is well poised for growth on the back of a broad range of dialysis products and services, and its growth strategy for 2020.

The stock has gained 27.9%, compared with the industry’s rally of 24.4% in a year’s time. Further, the S&P 500 Index rallied 18.3% in the same time frame.

The company — with a market capitalization of $26.22 billion — is one of the largest integrated providers of products and services for individuals undergoing dialysis following chronic kidney failure. It anticipates earnings to improve 7.7% over the next five years.

The stock also has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), are better picks than most.

Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #2.


Key Catalysts

Fresenius Medical provides access a wide range of Dialysis products in its own dialysis clinics and third-party clinics. These include modular machine components, dialyzers, bloodline systems, HD (hemodialysis) solutions, concentrates and water treatment systems.

At year-end 2019, home dialysis accounted for 13% of all treatments in the United States. By 2022, the company aims to perform more than 15% of all dialysis treatment in the United States in a home setting and is on track to achieve this target.

In the United States, the company is collaborating with other dialysis providers to create isolation clinics and dedicated shifts for COVID-19 positive patients. The primary aim of this collaboration is to keep dialysis patients out of the hospital whenever it is possible.

During second-quarter 2020, Fresenius Medical was able to sustain operations in more than 4,000 of its dialysis clinics worldwide without substantial interruption, while minimizing the impact of the pandemic on its staff and patients. Use of telehealth solutions was the primary reason behind this uninterrupted operational performance.

Notably, the company has set up a strong long-term objective called the ‘Growth Strategy 2020’, to plan new initiatives for gaining solid market traction.

Per the postulates of the ‘Growth Strategy 2020’, Fresenius Medical aims to boost revenues to $28 billion by 2020, corresponding to an average annual growth rate of around 10%. In this regard revenues increased 7% on a year-over-year basis and reached $17.9 billion in recent past, driven by strong performance in Health Care Services. Furthermore, management forecast an increase in revenues in tune with organic growth and acquisitions. At the same time, the company expects high single-digit annual growth in net income by 2020.

Which Way are Estimates Headed?

For 2020, the Zacks Consensus Estimate for revenues is pegged at $21.46 billion, indicating an improvement of 9.7% from the prior-year quarter. The same for adjusted earnings per share stands at $2.61, suggesting growth of 3.2% from the year-ago reported figure.

Other Stocks to Consider

Some other top-ranked stocks from the broader medical space include West Pharmaceutical Services, Inc. WST, Thermo Fisher Scientific Inc. TMO and PerkinElmer, Inc. PKI. While PerkinElmer sports a Zacks Rank of 1, both Thermo Fisher and West Pharmaceuticals carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

PerkinElmer has a projected long-term earnings growth rate of 17.4%.

West Pharmaceutical has a projected long-term earnings growth rate of 17.4%.

Thermo Fisher has an estimated long-term earnings growth rate of 15%.

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Fresenius Medical Care AG Co. KGaA (FMS) : Free Stock Analysis Report
 
PerkinElmer, Inc. (PKI) : Free Stock Analysis Report
 
Thermo Fisher Scientific Inc. (TMO) : Free Stock Analysis Report
 
West Pharmaceutical Services, Inc. (WST) : Free Stock Analysis Report
 
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