Pall Corporation (PLL): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

Pall Corporation PLL, based in New York, is a leading supplier of fine filters, principally made by the company using its proprietary filter media, and other fluid clarification and separations equipment for the removal of solid, liquid and gaseous contaminants from a wide variety of liquids and gases. Its products are used to discover, develop, and produce pharmaceuticals, produce safe drinking water, protect hospital patients, remove white blood cells from blood, enhance the quality and efficiency of manufacturing processes, keep equipment running efficiently, and protect the environment.

The company serves its customers in two distinct business segments: Life Science and Industrial.

Life Sciences (approximately 49.4% of revenues for 2013 came from this segment) the company's Life Sciences technologies facilitate the process of drug discovery, development and production. They are used extensively in the research laboratory, pharmaceutical and biotechnology industries, in blood centers and in hospitals at the point of patient care. The company's broad capability in the life sciences industry is a competitive strength and an important element of its strategy, going forward.

Medical Market - The medical products of Pall enhance the safety of blood transfusions and aid in controlling the spread of infections in hospitals. The company's extensive laboratory product portfolio is used in drug discovery, gene manipulation and proteomics applications. The cell therapy product portfolio provides competent technological solutions for the rising regenerative medicine market. The company is in the process of developing its second generation product to remove infection from donor blood and believes that infection reduction could be a large potential for the long-term market opportunity. A significant portion of Life Sciences sales is represented by products related to transfusion safety.

Biopharmaceuticals Market - The company sells separation systems and disposable filtration and purification technologies, primarily to pharmaceutical and biotechnology companies for use in the development and commercialization of chemically synthesized and biologically derived drugs and vaccines. The company provides a broad range of advanced filtration solutions for each critical stage of drug development through drug production. Its filtration systems and validation services assist drug manufacturers through the regulatory process and on to the market.

Biotechnology is the fastest growing industry in the market. Biotechnology drugs and biologically derived vaccines are filtration and purification intensive. One of the factors driving Pall's growth is the increasing adoption of single-use processing systems for producing drugs. In an attempt to further strengthen its Life Sciences business, Pall Corporation on Dec 23, signed an agreement to acquire the ATMI LifeSciences business. The deal is expected to close in the fiscal third quarter and is valued at $185 million. Further, this acquisition is estimated to be immediately accretive to Pall's revenues while being slightly dilutive for its earnings in fiscal 2014.

Food & Beverage Market Pall Corp. meets the filtration needs of the beer, wine, dairy, soft drink, bottled water, and food ingredient markets. The company's TFM strategy and capabilities assist customers to guarantee the quality of their products at a low cost and with minimum wastage.

Industrial (50.6%). The company provides enabling and process enhancing technologies throughout the industrial marketplace. This includes the Process Technologies, Aerospace and Microelectronics markets.

Process Technologies Market - The market includes producers of energy, oil, gas, renewable and alternative fuels, electricity, chemicals and municipal water. The rising demand for energy produced using clean and green technologies includes careful use and reuse of water, creating growth opportunities for the company. Within the Energy submarket, demand is created by oil and gas producers, refineries and power generating stations working to increase production, produce cleaner burning fuels, conserve water, meet environmental regulations and develop alternative fuel sources. Each of these applications provides opportunities for the company.

Further, Pall's water purifying technologies also represent an important growth opportunity. Worldwide, governments are executing severe regulations for drinking water standard. Pall's filters and systems provide a solution for these requirements.

Aerospace Market - The Company's filtration and fluid monitoring equipment for commercial and military aircraft, ships and land-based military vehicles protects critical systems and components. Included in the Pall product offering is its filtration solutions to the Machinery & Equipment submarkets, comprising a grouping of producers of mobile equipment and trucks, pulp and paper, mining, automotive and metals.

Microelectronics Market- The company sells highly sophisticated filtration and purification technologies for the semiconductor, data storage, fiber optic, advanced display and materials markets. The company provides a comprehensive suite of contamination control solutions for chemical, gas, water, chemical mechanical polishing and photolithography processes to meet the needs of this demanding industry. Integrated circuits, which control almost every device or machine in use today, require exceedingly high levels of filtration technologies, which Pall provides. While this part of the market is cyclical, Pall has strategically diversified into the consumer electronics market to lessen the impact of the industry's cycles. This strategic diversification into the macro electronic side of the market is enabling the company to capitalize on demand for computer gaming consoles, MP3 players, flat screen TVs and monitors, multimedia cell phones and ink jet printers and cartridges. These markets are typically less cyclical and filtration intensive. A newer application served by Microelectronics is the growing production of solar cells.