On Dec 24, we initiated our coverage on
) with a Neutral recommendation. Although CFN is well positioned
to benefit from current trends in healthcare, we are concerned
about continued pressure on margins and the effect of the
transition of product line to Pyxis ES platform.
On Nov 7, CareFusion posted flat adjusted earnings per share of
44 cents for the first quarter of fiscal 2014 compared with the
comparable quarter a year ago, but exceeded the Zacks Consensus
Estimate of 40 cents. Adjusted net earnings fell marginally by 3%
to $96 million from $99 million a year ago.
Revenues in the quarter dipped marginally by nearly 1% (both in
reported and constant currency) to $830 million, but topped the
Zacks Consensus Estimate of $818 million. The year-over-year
decrease was driven by fall in Medical Systems revenues.
Following the release of fiscal first quarter results, the Zacks
Consensus Estimate for fiscal 2014 earnings remained the same at
$2.34 per share. However, the Zacks Consensus Estimate for fiscal
2015 earnings went up by a penny or 0.4% to $2.64 over the same
time frame. CFN now has a Zacks Rank #3 (Hold).
CareFusion's products are considered among top-spending
priorities of healthcare providers given the pressing need for
implementing infusion or dispensing technologies. For fiscal
2014, CFN expects revenues to grow between 1 and 4% on a constant
However, the transition of product line to Pyxis ES platform is
hampering CFN's Medical Systems businesses. The transition is
affecting performance of the dispensing technologies business,
leading to unfavorable revenue mix and lower gross margins.
Other Stocks to Look For
Some better-ranked stocks worth a look in the medical products
). NuVasive carries a Zacks Rank #1 (Strong Buy), while both
Advaxis and Chimerix bear a Zacks Rank #2 (Buy).
ADVAXIS INC (ADXS): Get Free Report
CAREFUSION CORP (CFN): Free Stock Analysis
CHIMERIX INC (CMRX): Free Stock Analysis
NUVASIVE INC (NUVA): Free Stock Analysis
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