Mindray Medical posted mixed third-quarter 2014 results wherein
revenues grew 9.6% year over year but earnings fell 4.4%. However,
earnings were in line with our expectations. Though revenues
largely benefited from double-digit sales growth in China and
Western Europe, sales at certain key emerging markets continue to
be affected by unfavorable foreign exchange and political issues.
In the face of increasing uncertainties in currency and other macro
developments, Mindray expects 2014 net revenue year-over-year
growth below 10%, lower than the earlier growth guidance of at
least 10%. However, Mindray maintains a decent product pipeline and
brings out several products each year which should drive
sustainable growth. Therefore, we maintain our Neutral
recommendation on Mindray and set a target price of $28.00.
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
Mindray's largest segment, Patient Monitoring and Life Support
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 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 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 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
The company reported total revenues of $1.2 billion in 2013,
reflecting year-over-year growth of around 14.5%. Revenues from
China accounted for 45.4% of the company's total revenues while the
same from international operations comprised 54.6% of total
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