Alere Upped to Hold - Analyst Blog

On Apr 8, Zacks Investment Research upgraded Alere inc. ALR to a Zacks Rank #3 (Hold) from a Zacks Rank #4 (Sell).

Why the Upgrade?

The long-term expected earnings growth rate for this Massachusetts-based medical products stock is 12.5%. Moreover, Alere has delivered positive earnings surprises in all of the last 4 quarters with an average beat of 27.6%.

Alere reported its fourth-quarter results on Feb 6, 2014. Adjusted earnings per share came in at 62 cents, exceeding the Zacks Consensus Estimate of 56 cents by 10.7% and the prior-year earnings by 26.5%.

Earnings were primarily aided by healthy top-line growth of 2.2% in the reported quarter, which was primarily driven by a 2% increase in net revenues from the Professional Diagnostics business.

With respect to segment performance, net product revenues from Alere's Infectious Disease business increased 6.4%, principally driven by growth in HIV and malaria revenues.

In the second half of 2013, Alere's U.S. flu sales increased impressively by 19.3% year over year, reflecting the company's strong positioning with the distributors in both the hospital and physician's office market segments. Banking on its successful track record, Alere is anticipating consistent improvement in its business in 2014 and beyond.

The Zacks Consensus Estimate for earnings for 2014 remained flat at $2.47 per share with no downward revision over the last 30 days. For 2015, no estimates were revised downward over the same time frame, keeping the Zacks Consensus Estimate unchanged at $2.79 per share.

Other Stocks to Consider

In the medical products space, Enzymotec Ltd. ENZY, Covidien plc COV and William Demant Holding A/S (WILYY) are performing well. While Enzymotec holds a Zacks Rank #1 (Strong Buy), both Covidien and William Demant retain a Zacks Rank #2 (Buy).