On Jul 9, we retained
) at Neutral, following its first-quarter results. Although both
revenues and earnings missed estimates, the company has
considerable long-term growth opportunities.
Why the Retention?
Symmetry posted a disappointing first-quarter 2013 with adjusted
earnings of 4 cents a share, which missed the Zacks Consensus
Estimate of 15 cents by a large margin of 73.3%. It was also
lower than the year-ago adjusted EPS by 42.8%.
Revenues dropped 2% year over year to $98.9 million in the first
quarter, on account of a double-digit decline in Symmetry
Surgical sales, offset by decent gains in the Original Equipment
Manufacturer ("OEM") Solutions business. Revenues were lower than
the Zacks Consensus Estimate of $106 million.
The company's earnings have failed to beat the Zacks Consensus
Estimates in 3 out of the last 4 quarters with an average
negative surprise of 21.95%. Following the earnings release, the
Zacks Consensus Estimate for 2013 plunged 49.3% to 37 cents per
share and declined 7.2% to 90 cents per share for 2014.
Warsaw, IN-based Symmetry's core OEM business is gradually
showing signs of stability on the back of new products, which is
However, Symmetry Surgical is facing sales disruptions associated
with the integration of Codman surgical instruments business.
This disappointing performance prompted management to lower its
fiscal outlook. Symmetry needs to resolve its integration issues
to avoid wastage of resources. However, we believe that long-term
prospects of this business are still intact.
Moreover, uncertainty related to growth in global orthopedic
procedures as well as a tight capital spending environment is
affecting the business. The company's high level of indebtedness
along with currency fluctuations remain areas of concern.
Other Stocks to Consider
Medical products companies such as
) warrant a look. While Resmed carries a Zacks Rank #1 (Strong
Buy), the other 2 stocks carry a Zacks Rank #2 (Buy).
EDWARDS LIFESCI (EW): Free Stock Analysis
HANGER ORTHOPED (HGR): Free Stock Analysis
RESMED INC (RMD): Free Stock Analysis Report
SYMMETRY MEDICL (SMA): Free Stock Analysis
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