Stock Analysis & Ideas

Haemonetics Systems in Demand, Shares Discounted

I am bullish on Haemonetics Corporation (HAE) as it has a strong track record of generating growth and profitability and attractive valuation multiples relative to the company’s trading history. On top of that, Wall Street analysts are generally bullish on the stock, and the average price target implies good upside potential over the next year.

Haemonetics, founded in 1971, specializes in manufacturing and designing automated blood processing systems. The company-owned systems are responsible for the collection and processing of blood conveniently for patients, utilizing only essential components (such as red blood cells or plasma), and the remainder is returned to the initial donors. The company has also been offering information management software and consultancy services to various hospitals and blood banks.

While their primary source of revenue comes from clients based in the UK, they also have several distributors in other countries around the world. In this article, we will discuss why we are bullish on HAE stock.

Strong Growth Momentum

Thanks to the robust market demand for Nexsys PCS system with Persona technology, HAE continues to report yearly incremental growth in its revenues across multiple portfolios of products.

The plasma market for Haemonetics products seem particularly successful, and their growth in plasma software sales continues to register double-digit figures. With that said, the pandemic has significantly impacted the company’s Blood Center business performance. In fact, their blood center revenues declined by 6.5% to $75.7 million, and the future outlook for these products looks relatively poor.

Overall, however, the growth momentum remains robust for HAE.

Discounted Stock

In addition to its growth momentum, HAE stock’s valuation looks attractive right now. Its enterprise value to EBITDA ratio is well below its five-year average at 15.72 times compared to its five-year average of 17.13 times. Furthermore, its price-to-normalized earnings ratio is 22.09 times compared to its historic average of 32.42 times. Analysts expect the company to see revenue, EBITDA, and normalized earnings-per-share growth in 2022 of 13.3%, 12.3%, and 7.5%, respectively.

According to Wall Street analysts, HAE earns a Moderate Buy analyst consensus based on two Buy and three Hold ratings in the past three months. Additionally, the average analyst HAE price target of $68.75 puts the upside potential at 15.72%.

Summary and Conclusions

HAE stock is enjoying strong growth momentum right now and its stock is also trading at a clear discount to its historical valuations. While its blood processing products are meeting with mixed results at the moment, on the net it is experiencing strong growth

Furthermore, analysts are generally bullish on the stock and if it meets its price targets this year it will provide investors with strong returns. As a result, I am bullish.

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