We retain our Outperform recommendation on
) following the higher-than-expected earnings reported by the
company in the second quarter of 2013. The positive surprise
delivered by this Zacks Rank #2 (Buy) company was its fourth
consecutive earnings beat. The average beat is 8.08%. The
long-term expected earnings growth rate for this stock is
Why the Reiteration?
On Jul 31, 2013, Hospira reported second quarter 2013 adjusted
earnings of $0.55 per share, surpassing the Zacks Consensus
Estimate and the year-ago earnings of $0.51. Results during the
quarter were aided by lower costs.
The Specialty Injectable Pharmaceuticals segment, the biggest
contributor to Hospira's top line, performed well in the second
quarter of 2013 with segmental sales climbing 7.1% (up 7.4% at
constant currency) to $689.8 million. Drugs such as Precedex (a
sedative) performed well during the quarter. A factor favoring
the segment is the promising pipeline, which contains many
injectables going off-patent in the next few years. Continued
strong performance of the segment will boost Hospira's top
We are also encouraged by the positive opinion issued by the
European Medicines Agency's Committee for Medicinal Products for
Human Use regarding the approval of Inflectra (infliximab).
Inflectra is the biosimilar version of Johnson & Johnson /
Merck & Co. Inc.
) Remicade. The biosimilars market represents huge commercial
opportunity with a significant amount of biologic sales slated to
lose patent protection in the coming years.
We are also impressed by Hospira's efforts to resolve the
manufacturing issues confronting it. We still believe that
the stock is undervalued at current levels with significant scope
Another Stock Worth Considering
Apart from Hospira,
) is another favorably placed stock in the medical sector. Alere,
carrying a Zacks Rank #1 (Strong Buy), is worth considering.
ALERE INC (ALR): Free Stock Analysis Report
HOSPIRA INC (HSP): Free Stock Analysis Report
JOHNSON & JOHNS (JNJ): Free Stock Analysis
MERCK & CO INC (MRK): Free Stock Analysis
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