Is Haemonetics Corporation (HAE) an Undervalued Healthcare Stock to Buy in 2025

We recently published a list of 10 Worst Affordable Stocks To Buy Right Now. In this article, we are going to take a look at where Haemonetics Corporation (NYSE:HAE) stands against other worst affordable stocks to buy right now.

How is the Market Performing Entering the Rate Cuts

In one of our recent articles regarding the 10 Hot Penny Stocks On the Move, we discussed how the overall macroeconomic conditions have played a crucial role in building an environment leading to the upcoming Fed rate cut. Here’s an excerpt from the piece:

“The economy of the United States has stabilized, the risks of a recession have been delayed, and inflation continues to cool down. On August 30, Reuters reported that the Federal Reserve received a fresh confirmation regarding inflation continuing to ease. The personal consumption expenditure price index rose 2.5% year-over-year in July and inflation has stayed within the 2% goal set by the Fed. Fed Chairman has indicated that the “time has come to cut rates”.

Moreover, in another report by Reuters on the same day there were reports of the US dollar gaining as another key inflation measure fell in line with the forecasts. The Fed is expected to cut rates by 25 basis points this month. Moving forward markets have forecasted 100 bps of cuts by the end of 2024.

The stock market is already riding the tide of expected interest rate cuts. On August 20, CNBC reported that the stock market was climbing yet again, putting the S&P 500 and NASDAQ on track for their eighth positive session in a row, marking their longest winning streak this year.”

While there has been a debate about a 25-point or a 50-point cut, the market has fluctuated before the announcement. On September 17, CNBC reported that the S&P 500 was lower after reaching a record high on Tuesday. The market reached a new record high of 5,670.81 and was down 0.1% at 5,627. The Nasdaq moved 0.1% higher whereas the Dow Jones fell by 40 points.

The traders have overcome the summer headwinds and moved past the concerns over the health of the US economy on the back of expectations of the Fed cutting interest rates. On the other hand, Wall Street has been on hold. Analysts are hoping the rate cuts will help boost the earnings growth for companies.

Tom Lee, Fundstrat Global Advisors co-founder, joined CNBC to talk about how the market is expected to perform moving into the fed rate cuts and after the announcement. Lee believes that one of the factors leading to confusion among investors is the election period. The market is expected to stay in a fluctuating environment for the next eight weeks until the elections are over. However, fed rate cuts are coming at a crucial time to give some positive for the market.

There are two main reasons leading up to the rate cuts, one being the inflation easing and the other being the slower labor market that needs help from the Federal Reserve. Moreover, Lee thinks that regardless of the Fed deciding on a 25-point or 50-point cut, the result is going to be positive for the market. He thinks that investors should be confident for the next 12 months as whenever the Fed cuts rates, the win ratio for the markets has been almost 100%. Moreover, the markets rally post-elections regardless of who takes the seat.

Our Methodology

For compiling the list of 10 worst affordable stocks to buy right now, we used the Finviz stock screener. We set our filters to get affordable stocks with high short interest i.e. stocks trading below the market average Forward P/E which is 23.79, expecting positive earnings growth this year, and have high short interest. From the list of affordable stocks, we selected 20 stocks that were most widely held by institutional investors. Once we had the aggregated list, we ranked them based on their Short % of Shares Outstanding, sourced from Yahoo Finance. Please note that the list is ranked in ascending order of the short interest.

Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

A row of automated plasma collection devices in a modern laboratory.

Haemonetics Corporation (NYSE:HAE)

Forward P/E Ratio: 16.55

Earnings Growth This Year: 16.20%

Number of Hedge Fund Holders: 28

Short % of Shares Outstanding: 11.90%

Haemonetics Corporation (NYSE:HAE) is an international healthcare company that provides a range of medical products and solutions. The technology and solutions provided by the company help reduce the cost of healthcare and improve patient care.

The competitive edge of the company lies in the breadth of its portfolio. Its technology portfolio caters to blood and plasma components, surgical suits, and hospital transfusion services. Haemonetics Corporation (NYSE:HAE) Blood Center solutions are enabling a self-sufficient international plasma supply that is helping meet the demand for plasma therapy.

The company is facing challenges due to its planned CSL transition. As a result, its Plasma revenue declined 3% during the fiscal first quarter of 2025, moreover, North America’s disposal revenue was also down 5%. The transition is expected to slow revenue growth to single digits in fiscal year 2025. Haemonetics Corporation (NYSE:HAE) ranks 8th amongst our worst affordable stocks to buy right now as its short interest as a percentage of shares outstanding is at 11.9%.

But there is a bright side to the story as well. While the Plasma revenue declined 3% during the latest quarter they were up 35% last year, indicating its ability to drive business. Moreover, the company achieved 68% revenue growth on a subsequent basis, and management is focused on achieving individual product targets. The first quarter growth was driven by vascular closure devices and increased emphasis utilization across related procedures.

In addition, Haemonetics Corporation (NYSE:HAE) has also announced full market access for VASCADE MVP XL, which has a 58% larger collagen plug, with positive results across medical procedures. The company has already achieved penetration in 600 plus accounts in the US and over 100 accounts in Japan. It is now aiming to enter the European market this year. It also plans to sustain more than 20% growth in the vascular closure business and expand its leadership position in a $2.7 billion market.

Management continues to expect revenue growth between 5% to 8% for the fiscal 2025. It is cheap at current levels as it is trading at 16 times its forward earnings, a 24% discount to its sector. Analysts expect its earnings to grow by 16% during the year. Moreover, HAE was held by 28 hedge funds in Q2 2024, with total stakes worth $278.93 million. Royce & Associates is the top shareholder of the company, with a position worth $97.6 million.

Overall HAE ranks 8th on our list of the worst affordable stocks to buy right now. While we acknowledge the potential of HAE as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than HAE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

 

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Disclosure: None. This article is originally published at Insider Monkey.