On January 2, Zacks Investment Research downgraded
) to a Zacks #5 Rank (Strong Sell).
HOSPIRA INC (HSP): Free Stock Analysis Report
ROCHESTER MED (ROCM): Free Stock Analysis
(UTMD): ETF Research Reports
To read this article on Zacks.com click here.
Why the Downgrade?
Hospira is going through a rough patch due to the ongoing
manufacturing challenges at its Rocky Mountain facility as well
as issues with the Symbiq/Plum pumps. The ongoing manufacturing
issues at its Rocky Mountain facility have hurt the company's
earnings over the last few quarters. The issue, until resolved,
will remain a major overhang on the stock.
Moreover, the warning letter received by the company from the US
Food and Drug Administration (FDA) in August 2012 regarding an
inspection of the company's La Aurora de Heredia, Costa Rica
device manufacturing facility is another matter of concern. The
facility at Costa Rica makes most of Hospira's infusion devices
and sets (Symbiq, Plum etc.).
Moreover, the FDA's directive, issued in November 2012,
prohibiting the company from importing its Symbiq medication
infusion pumps, manufactured in Costa Rica, into the US is
another challenge for the company.
Manufacturing issues at the company's other facilities, such as
at Lake Forest, McPherson, Austin and IKKT are further challenges
for this global specialty pharmaceutical and medication delivery
All the negative factors mentioned above have contributed to the
downward bias in estimate revisions. Hospira was plagued by
manufacturing issues throughout 2012. Consequently, the Zacks
Consensus Estimate for 2012 plummeted 34.35% on a year over year
basis to $2.00 per share.
The quality control issues are expected to hurt earnings in 2013
as well. The Zacks Consensus Estimate for 2013 decreased 6.5% to
$2.32 per share over the last 90 days.
Other Stocks to Consider
Not all stocks in the medical sector are performing as poorly as
Hospira. The following stocks in the medical sector with
favorable Zacks Rank are performing well and are worth
Rochester Medical Corporation
) carries a Zacks #1 Rank (Strong Buy)
Utah Medical Products
) holds a Zacks #1 Rank (Strong Buy)