Meridian Bioscience Down to Strong Sell - Analyst Blog

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On May 23, 2014, Zacks Investment Research downgraded Meridian Bioscience, Inc. VIVO by a notch to a Zacks Rank #5 (Strong Sell).

Why the Downgrade?

For fiscal 2014, this Ohio-based fully integrated life sciences company saw six downward estimate revisions over the last one month with no upward revision. Consequently, the Zacks Consensus Estimate shrunk 9.3% to 88 cents per share for the year.

Meridian Bioscience reported negative earnings surprises in 2 of the last 4 quarters, with an average miss of 2.1%.

Shares of Meridian Bioscience recorded a drop of approximately 2.4% since reporting its fiscal 2014 second-quarter (ended Mar 31, 2014) results on Apr 24. Both earnings and revenues came in below expectations and management lowered its outlook for fiscal 2014.

Earnings per share for the quarter were flat at 24 cents compared with the year-ago level and missed the Zacks Consensus Estimate by 3 cents. Revenues rose 6.1% year over year to $50.1 million but fell short of the Zacks Consensus Estimate of $52 million.

Revenue growth was driven by an improvement in the company's Life Science business. However, lower gross margins in this segment coupled with higher costs from the company's Diagnostic business led to lower-than-anticipated operating margins during the quarter.

Overall, results for the first half of fiscal 2014 remained weak as Meridian Bioscience witnessed soft food and respiratory sales, seasonal weakness and competitive pressures. For the first six months ended Mar 31, 2014, earnings per share fell 6.7% year over year to 42 cents.

Meridian Bioscience's hospital-associated infection (HAI) category continues to lose momentum due to reduced rates of infection, lower hospital admissions and pricing pressure from increased competition.

Reflecting the lackluster second-quarter results, Meridian Bioscience lowered its fiscal 2014 earnings per share guidance to a range of 0.85 to 0.90 cents from the prior range of 98 cents to $1.03. The Zacks Consensus Estimate of 87 cents lies within the guided range.

Meridian Bioscience also slashed its fiscal 2014 revenue guidance to $190–$195 million from the previous band of $203–$208 million. The current Zacks Consensus Estimate of $194 million lies within the projected range.

Other Stocks to Consider

Some better-ranked medical product stocks include Cardica Inc. CRDC, Eagle Pharmaceuticals Inc. EGRX and Mead Johnson Nutrition Company MJN. All these stocks retain a Zacks Rank #2 (Buy).


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CARDICA INC CRDC: Free Stock Analysis Report

EAGLE PHARMACT EGRX: Free Stock Analysis Report

MEAD JOHNSON NU MJN: Free Stock Analysis Report

MERIDIAN BIOSCI VIVO: Free Stock Analysis Report

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