On Mar 21, we retained
) at Neutral, following its solid fourth-quarter 2012 results. In
spite of the upbeat performance, we remain on the sidelines given
the uncertain healthcare environment.
Why the Retention?
On Feb 13, Hanger's adjusted earnings of 58 cents per share
for the fourth quarter of 2012 surpassed the Zacks Consensus
Estimate by 2 cents. Profits surged 16% on the back of organic
growth across all 3 businesses coupled with accretive
acquisitions and controlled expenses.
Revenues increased 9.7% year over year to $272.2 million in
the quarter, beating the Zacks Consensus Estimate of $268.0
million. The company's Therapeutic business showed signs of a
turnaround in the quarter.
The company's earnings have also managed to beat the Zacks
Consensus Estimates in the last 4 quarters with an average
surprise of 5.20%. Following the earnings release, the Zacks
Consensus Estimate for 2013 has moved up by 3.0% to $2.06 per
share, but dropped 2.5% to $2.31 per share for 2014.
Hanger enjoys a sovereign position in the orthotic and
prosthetic (O&P) market and continues to gain market share.
The company is focusing on expanding its geographical footprint
and revenues through complementary acquisitions.
However, Hanger remains affected by a host of macro issues
including sequestration, fiscal cliff negotiations and measures
(including Medicare and Medicaid reimbursement cuts) adopted by
the state governments to cover budget deficits. Moreover, the
impact of the medical devices tax is likely to put pressure on
the company's margins. These factors are apprehended to weigh on
the company's results going forward.
Other Stocks to Consider
Other large-cap medical products companies such as
), carrying a Zacks Rank #1 (Strong Buy), as well as
Edwards Lifesciences Corp.
), which carry a Zacks Rank #2 (Buy), are expected to do well in
the medical industry.
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