Following the release of second quarter fiscal 2010 (ended April 4, 2010) results on April 29, 2010, majority of the analysts covering ZOLL Medical Corporation (ZOLL) have made upward revisions to their 2010 and 2011 annual estimates. The company performed impressively in the quarter, beating the Zacks Consensus Earnings Estimate by 4 cents.
We upgraded the stock to Outperform from Neutral following its impressive showing in the most recent quarter, its wide range of products and its expanding international presence.
Earnings Report Review
ZOLL Medical Corporation’s second quarter fiscal 2010 earnings of $0.17 per share surpassed the Zacks Consensus Estimate by $0.04. The better-than-expected results were driven by the strong showing of its LifeVest business and inclusion of its temperature management business.
Revenues in the reported quarter climbed approximately 15% year-over-year to $107.1 million.
(Read our full coverage on this earnings report here: ZOLL Tops Zacks Consensus)
Agreement of Analysts
All 5 analysts covering the stock for fiscal 2010 have raised their estimates in the last 30 days. Fiscal 2011 estimates have also been revised upward by 3 analysts with no downward revisions in the last 30 days.
There are quite a few reasons for the positive sentiment towards ZOLL. As we have indicated earlier, ZOLL performed impressively in the most recent quarter, driven by the strong showing of its LifeVest business and inclusion of its temperature management business. We are pleased with the company’s wide range of products. As such, ZOLL is a leading player in the global market for external defibrillators, which is worth over $1 billion annually.
ZOLL’s efforts to expand internationally are also encouraging. In the second quarter of fiscal 2010, international sales climbed approximately 15% year-over-year. Recently, ZOLL established a direct sales force in Germany which focuses on the LifeVest Wearable Defibrillator business in Germany.
ZOLL conducts its international business through subsidiaries in Canada, Germany, Austria, The Netherlands, France, Australia, New Zealand and the United Kingdom. ZOLL sells its products in more than 140 countries. The international presence has boosted its growth and we believe will continue doing the same in the coming years. Furthermore, the company has made multiple acquisitions in the past which have aided growth and the company is looking for more such opportunities.
Magnitude of Estimate Revisions
The table indicates that the earnings estimates have increased by 3 cents (over the last 30 days) for fiscal 2010. However, they have climbed quite substantially (by 13 cents) over the last 30 days for fiscal 2011. Therefore, the magnitude of estimate revisions further substantiates the fact that the long-term outlook for the Chelmsford, Massachusetts-based company is bright.
Our Recommendation
Following the impressive second quarter results, we have upgraded ZOLL to Outperform from Neutral. Results were aided by the strong performance of its LifeVest business and inclusion of its temperature management operations.
Furthermore, the wide range of products at ZOLL coupled with its growing international presence should drive growth in the coming quarters. Additionally, the company’s growth-by-acquisition strategy has also helped growth. ZOLL is on the lookout for more such profitable transactions.
We believe that the current price represents an attractive entry point for long-term investors.
About Earnings Estimate Scorecard
Len Zacks, PhD in mathematics from MIT, proved over 30 years ago that earnings estimate revisions are the most powerful force impacting stock prices. He turned this ground breaking discovery into two of the most celebrating stock rating systems in use today. The Zacks Rank for stock trading in a 1 to 3 month time horizon and the Zacks Recommendation for long-term investing (6+ months). These “Earnings Estimate Scorecard” articles help analyze the important aspects of estimate revisions for each stock after their quarterly earnings announcements. Learn more about earnings estimates and our proven stock ratings at http://www.zacks.com/education/
Read the full analyst report on “ZOLL”
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