Over the last six months, Haemonetics’s shares have sunk to $51.21, producing a disappointing 18.2% loss - a stark contrast to the S&P 500’s 24.4% gain. This might have investors contemplating their next move.
Is now the time to buy Haemonetics, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free for active Edge members.
Why Is Haemonetics Not Exciting?
Even though the stock has become cheaper, we don't have much confidence in Haemonetics. Here are three reasons you should be careful with HAE and a stock we'd rather own.
1. Slow Organic Growth Suggests Waning Demand In Core Business
In addition to reported revenue, organic revenue is a useful data point for analyzing Medical Devices & Supplies - Specialty companies. This metric gives visibility into Haemonetics’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.
Over the last two years, Haemonetics’s organic revenue averaged 4.3% year-on-year growth. This performance slightly lagged the sector and suggests it may need to improve its products, pricing, or go-to-market strategy, which can add an extra layer of complexity to its operations. 
2. Fewer Distribution Channels Limit its Ceiling
Larger companies benefit from economies of scale, where fixed costs like infrastructure, technology, and administration are spread over a higher volume of goods or services, reducing the cost per unit. Scale can also lead to bargaining power with suppliers, greater brand recognition, and more investment firepower. A virtuous cycle can ensue if a scaled company plays its cards right.
With just $1.35 billion in revenue over the past 12 months, Haemonetics is a small company in an industry where scale matters. This makes it difficult to build trust with customers because healthcare is heavily regulated, complex, and resource-intensive.
3. Revenue Projections Show Stormy Skies Ahead
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Haemonetics’s revenue to drop by 3%, a decrease from its 7.3% annualized growth for the past five years. This projection doesn't excite us and indicates its products and services will see some demand headwinds.
Final Judgment
Haemonetics’s business quality ultimately falls short of our standards. Following the recent decline, the stock trades at 10.3× forward P/E (or $51.21 per share). This valuation multiple is fair, but we don’t have much faith in the company. We're pretty confident there are superior stocks to buy right now. We’d suggest looking at the most entrenched endpoint security platform on the market.
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