Specialty pharmaceutical and medication delivery company Hospira Inc. (NYSE: HSP) provided bleak outlook for the year 2012. The company's adjusted earnings and sales for the fourth quarter came in above Street analysts' expectations.
The company reported a net loss of $214.0 million or $1.30 loss a share for the fourth quarter compared to net income of $60.6 million or 36 cents a share in the year earlier quarter. On an adjusted basis, earnings dropped 33.8 percent to 51 cents a share from 77 cents a share in the year-ago quarter. Net sales rose 2.2 percent to $1.01 billion from $992.1 million in the previous year quarter.
Street analysts were estimating the company to report earnings of 45 cents a share on revenues of $952.55 million.
The adjusted earnings per share were 2 cents above Goldman Sachs estimation and revenues came in 6 percent more than its predictions. The brokerage believes that top line increase was fueled by its Specialty Injectable Pharmaceutical business, which combined with a lower tax rate and share count supported the EPS performance relative to Goldman forecasts.
Analyst David Roman believes that operating results were weak with EBIT margins 80 basis points lower primarily from gross margin.
Moving ahead, Hospira expects adjusted earnings of $2.00 - $2.30 a share for 2012 and sees revenues be negative 1 percent to two percent positive on a constant currency. The earnings forecast is lower than analysts estimation of $2.43 a share and Goldman Sachs prediction of $2.47 a share.
Goldman Sachs thinks that relative to its outlook, growth in Specialty Injectable Pharmaceutical (SIP) and other pharma was offset by continued weakness in devices. The SIP strength came from more than expected Taxotere sales. The brokerage also thinks that the company continued to lose its share to CareFusion and Baxter.
The analyst believes that lower than expected outlook looks to be tied to EBIT margins since revenue projection was broadly in line with his estimation.
The analyst views that the important question is whether Hospira would be able to articulate a clear and decision plan toward warning letter/quality control remediation. The brokerage believes that this could prove more important than the projected 2012 EPS forecast and provide some perspective as to when Hospira can head back towards a more normalized earnings profile.
Goldman Sachs has maintained its Neutral rating and price target.