Markets

Haemonetics (HAE) Shares Tank on 2016 Guidance Cut

Shares of Haemonetics CorporationHAE plunged 12.2% on after-hours trading yesterday, following mixed projected results for its soon-to-be-reported second-quarter fiscal 2016 and reduced outlook for fiscal 2016.

The company currently expects to deliver adjusted earnings per share (EPS) of 40 cents in the second quarter. The current Zacks Consensus Estimate for earnings is pegged at 39 cents per share, lower than the preliminary projected figure.

On the contrary, Haemonetics expects to report total revenue of $220 million, which is substantially short of the current Zacks Consensus Estimate of $233 million.

In terms of the outlook for fiscal 2016, Haemonetics has lowered its previous guidance for both adjusted EPS as well as revenues. The company currently expects to deliver adjusted EPS of $1.65-$1.75, lower than the previous adjusted EPS guidance range of $1.98-$2.08. The current Zacks Consensus Estimate of $2.03 for fiscal 2016 lies above the revised guidance range.

On the other hand, total revenue for fiscal 2016 is now estimated to be within the $910-$920 million range, representing growth of 0-1% on a year-over-year basis and 4% at constant exchange rate or CER. This revised guidance range is lower than the earlier projected revenue guidance range of the company, which reflected growth of 4-6% on a year-over-year basis and 7-9% at CER. The current Zacks Consensus Estimate for revenue is pegged at $946 million, much above the company's revised guidance range.

Moreover, the company now expects to deliver adjusted operating income of approximately 4% at CER, lower than the previous guidance of double-digit growth in fiscal 2016.

According to management, this reduced outlook for full year fiscal 2016 was primarily driven by apprehensions of a disappointing revenue performance in the second-half of fiscal 2016. Haemonetics cited the consistent deterioration observed in its product markets in Russia, challenges faced by the company in implementing a contracted market share gain in Japan and timeline reassessment for penetration of recently introduced software products as factors responsible for the reduced outlook for revenues in the second half of fiscal 2016.

Further, Haemonetics mentioned that its primary growth drivers - Plasma, TEG and Emerging Markets - comprising about 60% of consolidated revenue, represented 8% growth at CER in the first half and are expected to continue to grow in the second half of fiscal 2016.

Our Take

We are disappointed with Haemonetics' preliminary declaration of second quarter results as the projected top line missed the current Zacks Consensus Estimate while the bottom line expectation slivered past the mark. Moreover, the lowered fiscal 2016 outlook has been a dampener.

Zacks Rank

Currently, Haemonetics carries a Zacks Rank #3 (Hold). Some better-ranked medical product stocks are Enzymotec Ltd. ENZY , ICU Medical, Inc. ICUI and NuVasive, Inc. NUVA . All three stocks sport a Zacks Rank #1 (Strong Buy).

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HAEMONETICS CP (HAE): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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