Yahoo Finance Hill-Rom (HRC) Trades on Product Innovation, Competition Rife
On Jan 31, we issued an updated research report on Hill-Rom Holdings, Inc. HRC. The stock carries a Zacks Rank #2 (Buy).
This Batesville, IN-based company has been trading above the broader industry in the past year. The stock has so far gained 46.9% in comparison with the industry's 26.8%. Hill-Rom exited the first quarter of fiscal 2018 on a strong note with better-than-expected earnings and revenues. The company saw a solid year-over-year increase in revenues on strong international growth, primarily banking on the 'One Hill-Rom' approach.
The company is focusing on product innovation, the latest launch being Connex Cardio ECG. Hill-Rom has updated its 2020 long-range financial objectives and outlook considering gains from the new tax reform. Hill-Rom now expects adjusted earnings growth of 12-14% on a compound annual basis through 2020, compared with the previous guidance of 10-12%.
Moreover, an improvement in gross and adjusted operating margin buoys optimism. Further, according to management, Hill-Rom expects the latest U.S. tax regulations to have a positive impact on its adjusted effective tax rate and earnings beginning the first quarter of fiscal 2018.
Hill-Rom’s merger and acquisition activities are going strong. The company actively pursues buyouts to accelerate growth in five key clinical areas viz. patient mobility, wound care and prevention, surgical, safety and efficiency, clinical workflow solutions and respiratory help. Apart from Welch Allyn and Trumpf, the recent noteworthy acquisitions include that of Virtus, Aspen Surgical and Mortara Instrument.
On the flip side, a decline in revenues at the Patient Support Systems segment is quite disappointing. Hill-Rom operates in a highly competitive space dominated by large as well as small and regional manufacturers. Also, unfavorable currency movement continues to be a threat as a large chunk of the company’s revenues is generated from international operations.
Key Picks
Other top-ranked stocks in the broader medical sector are PerkinElmer PKI, Bio-Rad Laboratories BIO and ResMed RMD.
Bio-Rad Laboratories has a Zacks Rank #2. The company has a long-term expected earnings growth rate of 25%. You can see the complete list of today’s Zacks #1 Rank stocks here.
PerkinElmer has a long-term expected earnings growth rate of 12.3%. The stock carries a Zacks Rank #2.
ResMed has a long-term expected earnings growth rate of 13%. The stock carries a Zacks Rank #2.
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