CareFusion Hits New 52-Week High - Analyst Blog

Shares of CareFusion Corporation CFN reached a new 52-week high of $43.33 on May 19, eventually closing at $43.16 on the same day. In fact, shares of this CA-based medical technology company have been gaining momentum since it reported strong third-quarter fiscal 2014 (ended Mar 31, 2014) results on May 5.

The company's shares have recorded a healthy 1-year return of 26.57%. The company's long-term estimated earnings per share EPS growth rate is pegged at 11.1%.

Strong Third-Quarter Performance

CareFusion reported its third-quarter financial results reflecting strong year-over-year increases in both revenues and adjusted earnings. Adjusted earnings per share reached 60 cents in the quarter, up 1.7% from 59 cents in the comparable quarter of the previous year. The year-over-year rise was primarily driven by the company's continued strength in Procedural Solutions and focus on cost management. However, earnings missed the Zacks Consensus Estimate of 63 cents by 4.8%.

Revenues increased 7.4% year over year and 7% on a constant currency basis to $968 million in the reported quarter. However, the top line missed the Zacks Consensus Estimate of $979 million by 1.1%.

On a segment basis, worldwide revenues of the Procedural Solutions segment increased 25.2% year over year to $397 million, along with 5% organic growth. Sales growth in this segment was driven by its clinically differentiated portfolio and contributions from recent acquisitions. Balanced growth was observed across all geographic regions and in each business line under this segment, with an impressive 74.7% revenue increase in Specialty Disposables owing to the Vital Signs acquisition.

CareFusion's research and development (R&D) expenses remained flat at $142 million, as the company continues to invest in next generation platforms for Medical Systems and Procedural Solutions. However, R&D expenses for Procedural Solutions in particular, have increased modestly.

Other Stocks to Consider

CareFusion currently carries a Zacks rank #3 (Hold). Other well-placed Medical stocks that warrant a look include ANI Pharmaceuticals, Inc. ANIP, Myriad Genetics Inc. MYGN and Illumina Inc. ILMN. All these stocks carry a Zacks Rank #1 (Strong Buy).

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