Mindray Medical International Limited (MR): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report


Mindray Medical posted a 1.9% fall in 2014-second quarter adjusted earnings per share to $0.53, but inched past the Zacks Consensus Estimate by $0.01. Net revenues improved 8.9% y/y, driven by strong international sales. Sluggish purchasing and marketing activities in the Chinese healthcare industry continue to have an unfavorable impact on the company's domestic sales. Revenues from certain key emerging markets are also affected by unfavorable foreign exchange and political issues. The company expects 2014 net revenues to grow at least 10% over 2013, lower than the earlier guidance of 15%. However, Mindray maintains a decent product pipeline and brings out several products each year. Therefore, we maintain our Neutral recommendation on Mindray and set a target price of $31.00.


Mindray Medical International Limited (MR), headquartered in Shenzhen, China, commenced operations in 1991. The company conducts much of its business through its consolidated operating subsidiary, Shenzhen Mindray, which was established in 1999. Mindray owns about 99.9% of the equity of Shenzhen Mindray. It maintains its global operational headquarters (HQ) in Shenzhen while the U.S. HQ is in Mahwah, New Jersey.

Mindray is a developer, manufacturer and seller of medical devices globally. It has three segments, namely Patient Monitoring and Life Support products, In-Vitro Diagnostic products and Medical Imaging Systems.

Mindray's largest segment, Patient Monitoring and Life Support (36.3% of total revenues in the first half of 2014), includes products such as patient monitoring devices (PMD), anesthesia devices, defibrillators, surgical lights, and beds. Generally, PMDs measure real-time, concurrent, or dynamic physiological parameters such as heart rate, blood pressure, respiration, and temperature. In China, the company is the leading player in the patient monitoring market.

The In-Vitro Diagnostics segment or IVD (28.6%) includes products in 5 instrument categories used for diagnostic testing: hematology analysis products, biochemistry analysis products, urine sediment analysis products, microbiology analysis products and coagulation analysis products. In addition, the company manufactures and sells over 150 separate reagents for both hematology and biochemistry analyzers. Reagents are a major source of recurring revenue.

The Medical Imaging Systems segment (25.4%) includes the following product lines: black and white ultrasound, color ultrasound, and digital radiography. Historically, this product segment has consisted primarily of portable and mobile ultrasound systems.

The Others segment (9.7%) derives revenues from provision of after-sales services along with research and development services performed for original design manufacturers (ODM). This segment also includes revenues from acquired business, such as orthopedic products, endoscope devices and healthcare IT solutions products that are outside the other three business segments.

Mindray sells products through different distribution channels in various parts of the world. In the U.S., U.K., France, Germany and the Netherlands, the company sells its products through a direct sales model. In China, it sells its goods mainly to third-party distributors. It had one of the largest distribution and sales networks for medical devices in that country with over 1,300 distributors and about 1,900 sales and sales support personnel. Outside China, Mindray marketed its products through more than 1,500 third-party distributors and its sales force of about 900 people. In 2013, revenues from China accounted for 45.4% of the company's total revenues and revenues from international operations accounted for 54.6% of the company's total revenues.

The company ensured after-sales service to distributors and hospitals in China through local offices. It also provides after-sales service for medical facilities based in the U.S., the U.K., France and Germany. The company extends after-sales care for its other international customers through its distribution channels.

Mindray maintains R&D facilities in Shenzhen, Beijing, Nanjing, Chengdu, Xi'An and Shanghai in China. The company runs R&D operations in Seattle, Washington, Mahwah, New Jersey, Stockholm, Sweden and Miami, Florida. It manufactures the majority of its products at its three plants located in Shenzhen, and one facility in Nanjing, China. Mindray also assembles and stores a number of products at its Mahwah, New Jersey facility.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Stocks

Referenced Stocks: MR , HQ , PMD



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