On Mar 8, 2013, we retained Mindray Medical International Limited (MR) at Neutral after the company beat Zacks Consensus Estimates for earnings and revenue for fourth quarter 2012.
Why the Retention?
Mindray released its results for the fourth quarter on Feb 25. The company posted adjusted earnings per share of 49 cents per share, better than the Zacks Consensus Estimate of earnings of 48 cents a share. Revenues in the reported quarter surged 19.7% year over year to $316.1 million, beating the Zacks Consensus Estimate of $304 million.
Over the past 30 days, the Zacks Consensus Estimate for 2013 has moved up by 8 cents to $2.05. For 2014, the Zacks Consensus Estimate has increased by 5 cents to $2.29 during the same timeframe.
Mindray provides guidance on a full year basis. The company forecasts revenue growth of 17% or more for 2013. MR also expects adjusted net income for the year to increase by a minimum of 15% year over year. The guidance does not take into account any tax advantage on account of software business status during 2011 and 2012, which might be received in 2013. The guidance incorporates an income tax rate of 15% for the Shenzhen subsidiary.
Mindray is a bellwether in the Chinese MedTech industry with a solid international presence. A key distinction with domestic competitors is that the majority of Mindray’s products have CE Mark and/or Food and Drug Administration (:FDA) clearance.
Mindray maintains a decent product pipeline and brings out several new products each year. New products contribute in a major way to Mindray’s revenues. In 2012, the company launched 10 new products and acquired four companies.
The company has entered the premium segment globally, where its competitive advantage is still unclear. Also, on the negative side, health care reforms in China and the U.S. may reduce demand for Mindray’s products. Competition is fierce and leads to price erosion over time.
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