On Nov 27, we retained
Symmetry Medical, Inc.
) at Neutral, following its mixed third-quarter 2013 results.
Although the company is facing several headwinds in the
near-term, the company has considerable long-term growth
Why the Retention?
On Oct 31, SMA posted third-quarter adjusted earnings of 7 cents,
beating the Zacks Consensus Estimate by 3 cents. However,
earnings were significantly lower than the year-ago adjusted
earnings of 16 cents per share. The decline resulted from soft
revenues as well as various internal issues.
Revenues declined 3% year over year to $98.0 million, falling
short of the Zacks Consensus Estimate of $101 million. Weak sales
in both the Original Equipment Manufacturer (OEM) Solutions and
the Symmetry Surgical businesses led to the downfall.
The company's earnings have failed to beat the Zacks Consensus
Estimates in 2 out of the last 4 quarters with an average
negative surprise of 10.16%. Following the earnings release, the
Zacks Consensus Estimate for 2013 increased 8% to 27 cents per
share but the same for 2014 inched down 1.9% to 53 cents.
We believe that long-term prospects of Symmetry are still intact.
New products, harmonized sales force and eventual accretion from
acquired businesses should bolster the company's growth going
However, multiple internal as well as external issues led to a
sudden sequential drop in revenues from the core OEM business.
Moreover, the high-margin Surgical business continues to face
headwinds from integration of the Codman business. All these
factors along with tempered gross margin have led management to
significantly lower its outlook for 2013.
Other Stocks to Consider
Investors interested in the medical products industry may
consider stocks like
Hill-Rom Holdings, Inc.
Boston Scientific Corporation
). While NUVA and HRC carries a Zacks Rank #1 (Strong Buy), BSX
carries a Zacks Rank #2 (Buy).
BOSTON SCIENTIF (BSX): Free Stock Analysis
HILL-ROM HLDGS (HRC): Free Stock Analysis
NUVASIVE INC (NUVA): Free Stock Analysis
SYMMETRY MEDICL (SMA): Free Stock Analysis
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