On Thursday, Needham reaffirmed its positive stance on Haemonetics (NYSE: NYSE:HAE), maintaining a Buy rating and a price target of $112.00. The firm highlighted the company's second-quarter fiscal year 2025 performance, which surpassed consensus expectations for both revenue and earnings per share (EPS). Haemonetics also upheld its full-year fiscal 2025 revenue and EPS outlook.
The company reported that organic growth accelerated to 4% in the second quarter, marking an increase from the 3% seen in the first quarter. Despite a consistent 3% organic decline in plasma sales during both quarters due to the CSL (OTC:CSLLY) transition, hospital organic growth exhibited a notable improvement. Hospital sales rose to 16% organic growth in the second quarter, up from 14% in the first quarter.
Haemonetics also saw a year-over-year increase in gross and operating margins, both rising by 270 basis points. The firm took note of these margin improvements as a sign of Haemonetics' headway toward its ambitious operating margin goal for fiscal year 2026. The company has set a long-range plan target to achieve a high-20% operating margin, which Needham interprets to mean 27% or higher.
Needham's analyst believes that Haemonetics' performance in the second quarter of fiscal year 2025 demonstrates solid progress toward reaching its operating margin target for fiscal year 2026. This assessment underpins the firm's decision to reiterate its Buy rating for Haemonetics' stock.
In other recent news, Haemonetics Corporation announced the departure of its Executive Vice President and Chief Technology Officer, Anila Lingamneni, effective November 1, 2024. Concurrently, the company reported a 10% organic revenue increase in Q4 and a 12% rise for the fiscal year, with growth expected across its core plasma and hospital business units. Haemonetics also upsized its private offering to $600 million in convertible senior notes, exceeding the initially proposed $525 million.
In product development, Haemonetics launched the VASCADE MVP XL venous closure system and gained CE Mark certification for its SavvyWire® Pre-Shaped Pressure Guidewire (NYSE:GWRE). These developments allow for product introduction to the European Union and other regions recognizing the CE Mark.
Turning to analyst coverage, BofA Securities and BTIG initiated coverage on Haemonetics with a Neutral and Buy rating, respectively. Needham upgraded the company's stock from Hold to Buy, based on the company's projected ability to achieve a high operating margin target for fiscal year 2026.
InvestingPro Insights
To complement Needham's positive outlook on Haemonetics (NYSE: HAE), recent data from InvestingPro provides additional context to the company's financial performance and market position.
InvestingPro data shows that Haemonetics has a market capitalization of $4.46 billion, with a P/E ratio of 38.5. This relatively high earnings multiple aligns with one of the InvestingPro Tips, which notes that HAE is "trading at a high earnings multiple." This could suggest that investors have high growth expectations for the company, potentially reflecting the positive outlook highlighted in Needham's analysis.
The company's revenue for the last twelve months as of Q1 2025 stood at $1.33 billion, with a notable revenue growth of 9.47% over the same period. This growth trend supports Needham's observation of accelerating organic growth and improved hospital sales performance.
An InvestingPro Tip indicates that Haemonetics' "cash flows can sufficiently cover interest payments," which speaks to the company's financial health and ability to manage its debt obligations. This could be particularly relevant as the company works towards its ambitious operating margin goals mentioned in the Needham report.
Another InvestingPro Tip highlights that HAE has been "profitable over the last twelve months," with analysts predicting continued profitability this year. This aligns with the positive earnings performance noted in Needham's analysis and supports the firm's optimistic stance on the stock.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights beyond those mentioned here. In fact, there are 8 more InvestingPro Tips available for Haemonetics, providing a deeper understanding of the company's financial position and market dynamics.
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