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Hospira Beats by a Penny

Zacks Equity Research

Hospira Inc.’s (HSP) fourth quarter 2012 earnings (excluding special items) of 55 cents per share beat the Zacks Consensus Estimate of 54 cents. Higher-than-expected revenues led to the earnings beat. Moreover, earnings were above the year-ago figure by 7.8%. Including one-time items, fourth quarter 2012 earnings came in at 3 cents per share as opposed to a loss of $1.30 suffered in the final quarter of 2011.

Fourth quarter revenues increased 8.4% to $1.1 billion, narrowly beating the Zacks Consensus Estimate of $1.04 billion.

Full year adjusted earnings came in at $2.01 per share, a penny above the Zacks Consensus Estimate but 33.9% below the year-ago earnings. Results were hurt by the manufacturing challenges at the company’s facility in Rocky Mountain, North Carolina. Full year earnings came in a penny above the company’s guidance. Revenues increased 0.9% to $4.1 billion in 2012, edging past the Zacks Consensus Estimate of $4.04 billion.

Quarter in Details

The SIP business, the biggest contributor to Hospira’s revenues, performed well in the quarter with sales from the segment climbing 11.9% (up 12.1% at constant currency) to $696.2 million.

Drugs such as Precedex performed well during the quarter. Moreover, the Aug 2012 re-launch of Hospira’s generic version of Sanofi’s (SNY) cancer drug, Eloxatin, also aided results. The SIP segment includes generic injectables as well as proprietary specialty injectables.

Sales in the Medication Management segment climbed 3.3% (up 3.2% at constant currency) to $268.6 million. Sales in the Other Pharma division climbed 1.5% (up 1.5% at constant currency) to $134.1 million.

Geographically, the Americas, Europe, Middle East and Africa and the Asia-Pacific markets contributed $869.7 million (up 10.3% at constant currency), $139.7 million (up 7.0% at constant currency) and $89.5 million (down 5.2% at constant currency), respectively, to total revenue in the final quarter of 2012.

2013 Outlook

Apart from releasing its financial results, the company provided guidance for 2013. Hospira expects top-line growth in the range of 1%-3% both on constant-currency and reported basis. The company expects 2013 adjusted earnings in the range of $2.05 to $2.20 per share, up 2%-9%. The Zacks Consensus Estimate for 2013 is at the high end of the guidance range.

Hospira carries a Zacks Rank #3 (Hold). Favorably placed stocks in the medical sector include Covidien plc (COV) and Edwards Lifesciences Corporation (EW). Both stocks sport a Zacks Rank #2 (Buy).

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