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Why Haemonetics Could Report Strong EPS Growth in Fiscal 2019

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Dec. 4 2020, Updated 10:52 a.m. ET

EPS guidance for fiscal 2019

In fiscal 2019, Haemonetics (HAE) expects to report adjusted earnings per share (or EPS) in the range of $2.0 to $2.3. In fiscal 2018, the company managed to report a 22% year-over-year (or YoY) rise in its adjusted EPS, which reached $1.87 through focused efforts to improve productivity and disciplined distribution of resources for capital and working capital requirements.

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EPS estimates

Wall Street analysts expect Haemonetics to report adjusted earnings per share (or EPS) close to $2.2 in fiscal 2019, which would be a YoY rise of around 16%. Peers such as Abbott Laboratories (ABT), Zimmer Biomet (ZBH), and Stryker (SYK) are expected to earn adjusted EPS close to $2.9, $4.4, and $7.2, respectively, in fiscal 2018.

Margin guidance for fiscal 2019

In fiscal 2019, Haemonetics (HAE) expects to witness adjusted operating margin in the range of 16% and 18%, which would be a YoY rise in the range 150 basis points to 350 basis points. In fiscal 2018, the company reported an adjusted operating margin close to 14.5%, which is a YoY rise of 150 basis points.

Complexity reduction initiative

In fiscal 2018, Haemonetics launched the Complexity Reduction Initiative, which is expected to enable the company to generate savings worth $80 million by the end of fiscal 2020. While the savings haven’t been significant in fiscal 2018, Haemonetics expects approximately 50% of the savings to be realized in the second half of fiscal 2019 and the remaining savings to materialize in fiscal 2020.

To generate these savings, Haemonetics has launched multiple cost saving initiatives as well as those targeted at improving overall operations, product quality, and safety. The company is currently working on programs for rationalizing its network and stock keeping units (or SKUs) and for improving its sourcing and procurement operations. Further, the company is also working on a corporate-wide product quality program as part of the Complexity Reduction Initiative.

Haemonetics aims to deploy these savings, which would account for $0.40 to $0.50 of the company’s adjusted EPS for boosting its revenues and improving its margins for future years.

In the next article, we’ll discuss growth prospects for Haemonetics’s plasma franchise in fiscal 2019 in greater detail.

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