Hill-Rom (HRC) Banks On Strategic Buyouts, Competition Rife

On Dec 12, we issued an updated research report on Hill-Rom (NYSE:HRC) . The stock carries a Zacks Rank #3 (Hold).

This Batesville, IN-based company has been trading above the broader industry in the past six months. The stock has so far gained 4.8% in comparison with the industry's 2.4%. Hill-Rom has been seeing an increase in revenues on strong international growth. The company is currently focused on gaining traction in untapped international markets on successful execution of its strategy, an efficient international team and organizational realignment.

Hill-Rom’s merger and acquisition (M&A) activities are going strong. The company actively pursues acquisitions to accelerate growth in five key clinical areas viz. advancing patient mobility, wound care and prevention, surgical, safety and efficiency, clinical workflow solutions and respiratory help. Apart from Welch Allyn and Trumpf, several recent noteworthy acquisitions include that of Virtus, Aspen Surgical and Mortara Instrument.
We are also upbeat about this leading global medical device company’s focus on expansion through product development which is reflected in the rise in its research and development spending. In this regard, the company has been regularly launching products. The recent FDA clearance for a multi-functional operating room table, specifically designed for the IMRIS Surgical Theatre, deserves a mention. Notably, this product integrates Hill-Rom's TruSystem 7500 Surgical Table platform and IMRIS MR Neuro tabletop with the IMRIS Surgical Theatre.

In November, Hill-Rom outlined impressive long-term growth strategies along with key initiatives. The company also stated its financial goals through fiscal 2020 which buoys optimism.

On the flip side, Hill-Rom operates in a highly competitive space dominated by large as well as small and regional manufacturers. Also, unfavorable currency movement continues to be a threat as a large part of the company’s revenues is generated through international operations.

Key Picks

A few better-ranked medical stocks are PetMed Express, Inc. (NASDAQ:PETS) , Align Technology, Inc. (NASDAQ:ALGN) and Myriad Genetics, Inc. (NASDAQ:MYGN) . Notably, PetMed, Align Technology and Myriad Genetics sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PetMed has a long-term expected earnings growth rate of 10%. The stock has rallied roughly 85.7% over a year.

Align Technology has a long-term expected earnings growth rate of 28.9%. The stock has gained 135.7% in a year.

Myriad Genetics has a long-term expected earnings growth rate of 15%. The stock has gained 81.2% in a year’s time.

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