Updated Research Report on Abaxis - Analyst Blog

By
A A A

On Mar 11, 2014, we issued an updated research report on Abaxis ( ABAX ). The company's third-quarter fiscal 2014 financial results lagged the Zacks Consensus Estimate on both top and bottom-line fronts.

Abaxis tumbled once again in the third quarter of fiscal 2014 with earnings per share of 14 cents missing the Zacks Consensus Estimate as well as the year-ago earnings by a massive 31.8%. Revenues also fell 18% to $40.8 million lagging the Zacks Consensus Estimate of $49 million.

The disappointing performance in the mainstay North American market was another downside in the quarter. According to Abaxis, it continued to face challenges while transiting from a direct sales approach to a distributor model which caused imbalances in field inventory. Mixed performance from some of the smaller distributor partners of Abaxis and disruptions in field sales organization also posed as potent headwinds. All these factors resulted in a cascading effect that made forecast difficult, and led to inefficiencies in factories, leading to higher factory cost and lower gross margins.

Gross margin went downhill by over 499 basis points (bps) in the quarter. We believe that a growing proportion of revenues from low-margin offerings may adversely affect the company's margin further. We also remain apprehensive about Abaxis' dependence on distributors and its fiercely competitive environment.

Barring the fourth quarter of fiscal 2013, Abaxis has delivered negative surprises in each of the last four quarters, with an average miss of 18.60%. The company's earnings per share in the last reported quarter declined a huge 30% on a year-over-year basis. The stock currently carries a Zacks Rank #5 (Strong Sell).

Key Picks from the Sector

Nonetheless, medical stocks such as Covidien plc ( COV ), Stryker Corporation ( SYK ) and SurModics, Inc. ( SRDX ) are expected to do well. All the three stocks hold a Zacks Rank #2 (Buy).



ABAXIS INC (ABAX): Free Stock Analysis Report

COVIDIEN PLC (COV): Free Stock Analysis Report

SURMODICS (SRDX): Free Stock Analysis Report

STRYKER CORP (SYK): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



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 , Business , Stocks

Referenced Stocks: ABAX , COV , SRDX , SYK

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Russell’s One Good Reason
Russell’s One Good Reason           
Tammy’s One Good Reason
Tammy’s One Good Reason             
Lisa’s One Good Reason
Lisa’s One Good Reason              

Stocks

Referenced

100%
67%
100%
100%

Most Active by Volume

87,324,760
  • $7.31 ▲ 22.04%
79,329,227
  • $17.16 ▲ 0.76%
74,153,988
  • $8.87 ▼ 5.84%
49,177,672
  • $34.01 ▲ 4.39%
44,197,901
  • $101.40 ▲ 1.38%
43,197,735
  • $11.70 ▲ 3.36%
42,712,021
  • $74.99 ▲ 1.19%
42,423,171
  • $108 ▲ 0.95%
As of 10/31/2014, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com