I am bullish on Haemonetics Corporation (HAE), as its attractive stock price and recovering business profile look promising.
Haemonetics is a global healthcare company that offers blood and plasma supplies and services.
Dr. Allen Latham founded the company in the 1970s, and the company has expanded its operations to over 16 countries since. (See HAE stock charts on TipRanks)
Strengths
Haemonetics offers innovative solutions for hematology through its core business segments: Plasma, Blood Center, and Hospital.
The company’s main value is due to its position as the leading developer of blood plasma collection devices. Haemonetics owns 75% of the market share in this sphere, which it has amassed through a series of strategic acquisitions.
The company also acquired Cardiva this year, making it the owner of the only FDA-approved vascular closure device for electrophysiology procedures.
Recent Results
Haemonetics Corp reported an adjusted EPS of $0.50 for the first quarter of 2022, showing 8.7% growth year-over-year, surpassing the 6.4% growth consensus estimate. It announced revenue of $228.5 million – an increase of 16.8% year-over-year – which was due to recovery across all businesses, particularly hospitals and rollouts of Plasma Persona.
Haemonetics’ Plasma category reported revenue of $71.8 million, indicating an increase of 5.3% year-over-year (up 6.2% on an organic basis). Revenues at Blood Center were $72.9 million, showing a decrease of 6.2% (down 5.9% on an organic basis).
Hospital revenues showed an astounding growth of 75.1% (up 26.4% on an organic basis) and rose to $78.5 million. This was due to continued improvements in hospital procedures that led to increased use of disposable equipment, strong capital sales in the North American region, and new business opportunities in the European market.
The latest quarterly results showed a merrier picture for Haemonetics than expected. The company recorded year-over-year revenue growth due to recovery across several business segments, and an upward trend in the Hemostasis Management product line.
There is also a strong customer demand for personal technology, and the company has also reinstated its full-year 2022 guidance, which is promising.
However, Haemonetics also reported a sluggish Blood Center business, thanks to the COVID-19 pandemic. The stiff competition and continued economic uncertainty also remain a point of concern for investors.
Valuation Metrics
Haemonetics stock looks fairly valued at the moment. Its EV/EBITDA ratio is 15.4x, and its price to normalized earnings ratio is 22.5x, neither of which is particularly attractive nor particularly expensive.
Wall Street’s Take
From Wall Street analysts, Haemonetics earns a Strong Buy analyst consensus, based on five unanimous Buy ratings in the past three months. Additionally, the average HAE price target of $77.80 puts the upside potential at 10.8%.
Summary and Conclusions
Haemonetics stock looks reasonably attractive at the moment, as Wall Street analysts are unanimously bullish on it.
Furthermore, the business is seeing revenue growth while beating analyst consensus estimates. Last, but not least, the stock price does not look expensive at all for a company with strong growth momentum.
That said, the company is not without risks, so investors may want to consider limiting their exposure to the stock.
Disclosure: On the date of publication, Samuel Smith had no position in any of the companies discussed in this article.
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