We maintain our Neutral rating on Haemonetics Corporation (HAE) with a target price of $58 per share, based on a P/E of 18.1x our fiscal 2011 EPS estimate of $3.20. Haemonetics’ third quarter fiscal 2010 results were mixed.

Earnings per share of 71 cents narrowly missed the Zacks Consensus Estimate of 72 cents. However, earnings were better than 63 cents in the year-ago quarter.

Total sales in the third quarter increased 6.3% year over year to $165.2 million. All the major business segments witnessed growth.
Plasma disposables revenues increased 10.4% year over year to $59.2 million. Growth was driven by the higher market growth of plasma disposables coupled with Haemonetics’ gain in market share and favorable price movements. Platelet disposables revenue increased 9.2% year over year to $39.8 million due to the company’s strong platelet distribution business in key markets.
Red Cell disposables revenues declined 7.9% year over year to $12.0 million. The decline in revenue can be attributed to lower demand for red cells in hospitals owing to a reduction in elective surgeries.

Haemonetics’ Surgical, OrthoPAT and Diagnostics revenues increased 0.7%, 8.3% and 11.3% year over year to $17.9 million, $9.9 million and $5.8 million, respectively. The company’s Software solutions registered a revenue growth of 9.0% year over year to $8.3 million. Equipment and other revenues declined 2.6% year over year to $12.4 million.
Haemonetics Corp. is the market leader in developing and manufacturing blood collection and processing technologies. Haemonetics operates in a very competitive environment, which includes big players like Baxter International Inc. (BAX), Abbott Laboratories (ABT) and Medtronic Inc. (MDT).

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