Hill-Rom Grows on Acquisitions, Asia Pacific Sales Drop
On Dec 20, we issued an updated research report on Hill-Rom Holdings, Inc. HRC. Post the company’s completion of the $2.05-billion acquisition of Welch Allyn, the company now boasts a significantly larger global reach with operations across 30 countries worldwide. The stock carries a Zacks Rank #3 (Hold).
Shares of Hill-Rom have outperformed the industry in the past three months. The stock has so far lost 5.1% compared with the industry's 14.6% fall.
Notably, Hill-Rom’s fourth-quarter fiscal 2018 adjusted earnings marked the 13th consecutive period of double-digit growth. The company also registered solid increase in revenues on robust domestic growth, driven by a sturdy performance in Patient Support Systems and Front Line Care.
In fiscal 2018, international core revenues were strong. Europe, Canada and the Middle East collectively grew in high-single digits. The company is currently focusing on product innovation.
For the full year, it has achieved more than $300 million as new product revenues.
In 2019, the company expects to generate above $400 million in new product revenues, achieving its 2020 objective a year in advance. Hill-Rom plans to expand its global reach with the launch of Centrella in the Middle East and Australia during 2019.
Accordingly, the company is concentrating on product innovation. In patient support systems, the company launched Hill-Rom Envella Air Fluidized Therapy Bed. Within the respiratory care business, it introduced the Monarch Airway Clearance System. The company also announced the upgrade of its Welch Allyn Spot Vision Screener.
Additionally, Hill-Rom's merger and acquisition activities are reaping benefits. The company actively pursues buyouts to accelerate growth across five key clinical areas such as patient mobility, wound care and prevention, surgical, safety and efficiency, clinical workflow solutions as well as respiratory help. Apart from Welch Allyn and Trumpf, the recent noteworthy transactions include integration of Virtus, Aspen Surgical and Mortara Instrument among others.
On the flip side, international revenues suffered a decline due to a dip in sales with regard to the Asia-Pacific region. Hill-Rom operates in a highly competitive space, dominated by large and small as well as local manufacturers. Also, unfavorable currency movement remains an overhang since a large chunk of its revenues is drawn from international operations.
Zacks Rank & Key Picks
Hill-Rom currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are Veeva Systems VEEV, Integer Holdings Corp. ITGR and Surmodics, Inc. SRDX.
Veeva Systems’ long-term earnings growth rate is estimated at 19.5%. The stock carries a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Integer Holdings, with a Zacks Rank #2 (Buy), has an expected earnings growth rate of 31.2% for the first quarter of 2019.
Surmodics’ long-term earnings growth rate is projected at 10%. The stock currently carries a Zacks Rank of 2.
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