On Tuesday, BTIG reaffirmed its Buy rating and $112.00 price target for Haemonetics Corporation (NYSE:HAE), following the company's announcement of the sale of its Whole Blood division to GVS, S.p.A. According to InvestingPro data, the company maintains a "GREAT" financial health score, with liquid assets exceeding short-term obligations and strong cash flows to cover interest payments.
The deal, which includes Haemonetics' whole blood collection, processing, and filtration solutions, as well as its Covina, California manufacturing facility and related assets in Tijuana, Mexico, is anticipated to finalize in Q1 CY25. Haemonetics will receive $44.6 million in cash upfront and up to $22.5 million in contingent considerations over the next four years.
Haemonetics has been transparent about its intent to streamline its Whole Blood segment, making the sale to GVS unsurprising. The transaction is expected to bolster Haemonetics' focus on its Blood Center business, which will now concentrate exclusively on Apheresis solutions for automated blood collection.
The Whole Blood business contributed approximately $72 million in sales in FY24, and a forecast of around $62 million in revenue was projected for FY25. The divestiture is poised to enhance Haemonetics' financial performance by eliminating a segment that has historically weighed on the company's profit margins. With a current gross profit margin of 55.34% and revenue growth of 9.84% in the last twelve months, the company shows strong operational efficiency.
BTIG anticipates a positive response from investors to this strategic move and predicts an uptick in Haemonetics' share value in Tuesday's trading session. The firm's financial estimates for Haemonetics remain unchanged at this time, with plans to revise their model post-transaction completion.
The proceeds from the sale are slated for general corporate use and further investments in the company's growth initiatives. InvestingPro analysis suggests the stock is currently undervalued, with analyst targets ranging from $85 to $125. Discover more insights and 8 additional ProTips for Haemonetics in the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Haemonetics Corporation reported a robust second quarter for fiscal year 2025, with a notable 9% increase in revenue to $346 million. This was primarily driven by a 31% surge in hospital revenue, attributed to strong demand for Blood Management Technologies and the launch of the VASCADE MVP XL. Adjusted earnings per share rose 13% to $1.12, leading the company to raise its organic growth guidance for the year. However, the firm experienced a 3% decline in plasma revenue.
Haemonetics also initiated a $75 million accelerated share repurchase program, part of a $300 million authorization, indicating the company's commitment to generating shareholder returns. Despite challenges in the China market and a slower-than-expected rollout of acquired products, Haemonetics maintains its total revenue growth expectation for fiscal 2025 at 5% to 8%.
These recent developments underscore the company's robust performance and growth trajectory, particularly in its hospital business. The management remains optimistic about future prospects, including potential market share gains in the plasma business and strategic international expansion.
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