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Here's Why You Should Add Hill-Rom (HRC) to Your Portfolio
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Hill-Rom Holdings, Inc. has been gaining on robust fiscal fourth-quarter results. Hill-Rom’s deal to be acquired by Baxter for $156.00 per share in cash buoys optimism. The company’s progress in digital health looks encouraging. However, macroeconomic headwinds and a tough competitive landscape are concerning.
Over the past year, the Zacks Rank #2 (Buy) stock has gained 63.9% versus the industry’s 4.8% fall and the S&P 500’s 27.5% rise.
The renowned global medical device provider has a market capitalization of $10.27 billion. The company projects 11.5% growth for the next five years and expects to maintain strong performance. The company surpassed estimates in the trailing four quarters, the average surprise being 20.82%.
Key Growth Catalysts
Impressive Q4 Results: Hill-Rom exited fourth-quarter fiscal 2021 with better-than-expected earnings and revenues. The year-over-year upside in Front Line Care can be attributed to strong demand and double-digit growth for Welch Allyn patient vital signs and cardiac monitoring devices, physical assessment tools including new digital solutions and vision screening products. The company witnessed improved demand for patient positioning equipment and operating room tables, including record placements of Integrated Table Motion, as surgical procedures continued to rebound.
Sell-off Decision to Baxter Seems Strategic: On Sep 2, 2021, Hill-Rom entered into a definitive merger agreement. Per the terms, Baxter has agreed to acquire Hill-Rom for a total equity value of approximately $10.5 billion and a total enterprise value of approximately $12.4 billion, including the assumption of debt. The product offerings of the combined companies are going to complement each other. The expanded offerings claim to better support the patient in the hospital, at home and in alternate care sites, allowing better integration and coordination of healthcare delivery.
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Progress in Digital Health Space: Hill-Rom’s smartphone application LINQ mobile is currently available in the United States and Canada. Per the company, the platform has integrated Clinical Workflows with Nurse Call and clinical surveillance with monitoring systems to enhance care team communication and efficiency. Per management, this move is expected to have paved the way for an additional market opportunity of around $200 million. To fortify its ground in the digital health space, Hill-Rom acquired the contact-free continuous monitoring technology from EarlySense in February. This digital sensing technology is currently integrated into Centrella Smart+ bed to help identify clinical deterioration that can lead to improved survival, decreased costs and reduced need for ICU admissions.
However, downsides may result from macroeconomic headwinds faced by Hill-Rom. As the company’s business depends heavily on general domestic and global economic conditions, economic turmoil is a concern.
Also, according to the company, it is exposed to currency fluctuation. Unfavorable currency movement continued to be a major dampener during the fiscal fourth quarter and the company does not expect any improvement in this scenario any time soon.
Estimate Trend
Hill-Rom has been witnessing a positive estimate revision trend for 2021. Over the past 60 days, the Zacks Consensus Estimate for its earnings has moved 0.5% north to $6.44.
The Zacks Consensus Estimate for its fiscal 2021 revenues is pegged at $3.09 billion, suggesting a 2.22% improvement from the year-ago number.
Chemed has a long-term earnings growth rate of 7.7%. The company surpassed earnings per share (EPS) estimates in three of the trailing four quarters and missed in one, delivering a surprise of 5.6%, on average.
Chemed has outperformed its industry over the past year. CHE has gained 3.7% against a 35.6% industry decline.
LabCorp reported third-quarter 2021 adjusted EPS of $6.82, which surpassed the Zacks Consensus Estimate by 42.9%. Revenues of $4.06 billion outpaced the Zacks Consensus Estimate by 13.4%.
LabCorp has an estimated long-term growth rate of 10.6%. LH surpassed estimates in the trailing four quarters, the average surprise being 25.7%.
Medpace reported third-quarter 2021 adjusted EPS of $1.29, surpassing the Zacks Consensus Estimate by 20.6%. Revenues of $295.57 million beat the Zacks Consensus Estimate by 1.2%.
Medpace has an estimated long-term growth rate of 16.4%. MEDP surpassed estimates in the trailing four quarters, the average surprise being 11.9%.
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Here's Why You Should Add Hill-Rom (HRC) to Your Portfolio
Hill-Rom Holdings, Inc. has been gaining on robust fiscal fourth-quarter results. Hill-Rom’s deal to be acquired by Baxter for $156.00 per share in cash buoys optimism. The company’s progress in digital health looks encouraging. However, macroeconomic headwinds and a tough competitive landscape are concerning.
Over the past year, the Zacks Rank #2 (Buy) stock has gained 63.9% versus the industry’s 4.8% fall and the S&P 500’s 27.5% rise.
The renowned global medical device provider has a market capitalization of $10.27 billion. The company projects 11.5% growth for the next five years and expects to maintain strong performance. The company surpassed estimates in the trailing four quarters, the average surprise being 20.82%.
Key Growth Catalysts
Impressive Q4 Results: Hill-Rom exited fourth-quarter fiscal 2021 with better-than-expected earnings and revenues. The year-over-year upside in Front Line Care can be attributed to strong demand and double-digit growth for Welch Allyn patient vital signs and cardiac monitoring devices, physical assessment tools including new digital solutions and vision screening products. The company witnessed improved demand for patient positioning equipment and operating room tables, including record placements of Integrated Table Motion, as surgical procedures continued to rebound.
Sell-off Decision to Baxter Seems Strategic: On Sep 2, 2021, Hill-Rom entered into a definitive merger agreement. Per the terms, Baxter has agreed to acquire Hill-Rom for a total equity value of approximately $10.5 billion and a total enterprise value of approximately $12.4 billion, including the assumption of debt. The product offerings of the combined companies are going to complement each other. The expanded offerings claim to better support the patient in the hospital, at home and in alternate care sites, allowing better integration and coordination of healthcare delivery.
Progress in Digital Health Space: Hill-Rom’s smartphone application LINQ mobile is currently available in the United States and Canada. Per the company, the platform has integrated Clinical Workflows with Nurse Call and clinical surveillance with monitoring systems to enhance care team communication and efficiency. Per management, this move is expected to have paved the way for an additional market opportunity of around $200 million. To fortify its ground in the digital health space, Hill-Rom acquired the contact-free continuous monitoring technology from EarlySense in February. This digital sensing technology is currently integrated into Centrella Smart+ bed to help identify clinical deterioration that can lead to improved survival, decreased costs and reduced need for ICU admissions.
However, downsides may result from macroeconomic headwinds faced by Hill-Rom. As the company’s business depends heavily on general domestic and global economic conditions, economic turmoil is a concern.
Also, according to the company, it is exposed to currency fluctuation. Unfavorable currency movement continued to be a major dampener during the fiscal fourth quarter and the company does not expect any improvement in this scenario any time soon.
Estimate Trend
Hill-Rom has been witnessing a positive estimate revision trend for 2021. Over the past 60 days, the Zacks Consensus Estimate for its earnings has moved 0.5% north to $6.44.
The Zacks Consensus Estimate for its fiscal 2021 revenues is pegged at $3.09 billion, suggesting a 2.22% improvement from the year-ago number.
Other Key Picks
A few other similar-ranked stocks from the broader medical space are Chemed Corporation (CHE - Free Report) , Laboratory Corporation of America Holdings, or LabCorp (LH - Free Report) and Medpace Holdings, Inc. (MEDP - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Chemed has a long-term earnings growth rate of 7.7%. The company surpassed earnings per share (EPS) estimates in three of the trailing four quarters and missed in one, delivering a surprise of 5.6%, on average.
Chemed has outperformed its industry over the past year. CHE has gained 3.7% against a 35.6% industry decline.
LabCorp reported third-quarter 2021 adjusted EPS of $6.82, which surpassed the Zacks Consensus Estimate by 42.9%. Revenues of $4.06 billion outpaced the Zacks Consensus Estimate by 13.4%.
LabCorp has an estimated long-term growth rate of 10.6%. LH surpassed estimates in the trailing four quarters, the average surprise being 25.7%.
Medpace reported third-quarter 2021 adjusted EPS of $1.29, surpassing the Zacks Consensus Estimate by 20.6%. Revenues of $295.57 million beat the Zacks Consensus Estimate by 1.2%.
Medpace has an estimated long-term growth rate of 16.4%. MEDP surpassed estimates in the trailing four quarters, the average surprise being 11.9%.