Hospira Downgraded to Strong Sell - Analyst Blog
January 03 2013 - 11:35AM
Zacks
On January 2, Zacks Investment Research downgraded
Hospira, Inc. (HSP) to a Zacks #5 Rank (Strong
Sell).
Why the Downgrade?
Hospira is going through a rough patch due to the ongoing
manufacturing challenges at its Rocky Mountain facility as well as
issues with the Symbiq/Plum pumps. The ongoing manufacturing issues
at its Rocky Mountain facility have hurt the company’s earnings
over the last few quarters. The issue, until resolved, will remain
a major overhang on the stock.
Moreover, the warning letter received by the company from the US
Food and Drug Administration (FDA) in August 2012 regarding an
inspection of the company’s La Aurora de Heredia, Costa Rica device
manufacturing facility is another matter of concern. The facility
at Costa Rica makes most of Hospira’s infusion devices and sets
(Symbiq, Plum etc.).
Moreover, the FDA’s directive, issued in November 2012, prohibiting
the company from importing its Symbiq medication infusion pumps,
manufactured in Costa Rica, into the US is another challenge for
the company.
Manufacturing issues at the company’s other facilities, such as at
Lake Forest, McPherson, Austin and IKKT are further challenges for
this global specialty pharmaceutical and medication delivery
company.
All the negative factors mentioned above have contributed to the
downward bias in estimate revisions. Hospira was plagued by
manufacturing issues throughout 2012. Consequently, the Zacks
Consensus Estimate for 2012 plummeted 34.35% on a year over year
basis to $2.00 per share.
The quality control issues are expected to hurt earnings in 2013 as
well. The Zacks Consensus Estimate for 2013 decreased 6.5% to $2.32
per share over the last 90 days.
Other Stocks to Consider
Not all stocks in the medical sector are performing as poorly as
Hospira. The following stocks in the medical sector with favorable
Zacks Rank are performing well and are worth considering.
1) Rochester Medical Corporation
(ROCM) carries a Zacks #1 Rank (Strong Buy)
2) Utah Medical Products (UTMD)
holds a Zacks #1 Rank (Strong Buy)
HOSPIRA INC (HSP): Free Stock Analysis Report
ROCHESTER MED (ROCM): Free Stock Analysis Report
(UTMD): ETF Research Reports
To read this article on Zacks.com click here.
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