RBC Cuts Haemonetics to 'Underperform'

Analyst Steve Hamill says higher costs hurt earnings for the maker of blood processing equipment

RBC Capital downgraded Haemonetics (HAE ) to underperform.

Analyst Steve Hamill says he had a 24 cents estimate, and the consensus was at 23 cents.

He notes Haemonetics, a maker of blood collection and processing equipment, pointed to a revenue shortfall for the miss. But he says he'd point to cost of goods sold, as well as selling, general, and administrative expense levels, which both jumped 2%+ sequentially.

Hamill cut the $22 target to $15, which he derived by applying a p-e of 12 to (reduced from 17) his $1.27 calendar 2003 earnings per share estimate. He says he cut the target multiple because he expects to reduce his calendar 2003 earnings per share estimate following the company's conference call.

He notes his multiple is well below peers' average, which is in the range of 14 to 16. Hamill says the framework underpinning management's newly released fiscal 2004 (Mar.) guidance is not yet known.

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