To be sure, the company, which mainly makes equipment found in hospital intensive-care units, is still finding its way after spinning off from Cardinal Health (ticker: CAH) in 2009. Profit margins lag the industry average. Revenue growth remains tepid.
But CareFusion (CFN) is fixing all that. The company is making acquisitions and developing new products. And while it waits for those investments to eventually stimulate sales, it's restructuring to lower costs and boost profitability, which is fueling double-digit profit growth.
Investors are beginning to embrace the stock. At less than $26, the share price has climbed more than 14% since Aug. 8 when quarterly profit topped expectations.Still, at roughly seven times Ebitda (earnings before interest, taxes, depreciation and amortization), CareFusion is one of the cheapest medical-device names in the Standard & Poor's 500 index.
"When you look at our fundamentals, we are strong, we are well positioned and we are very, very valuable," CareFusion Chairman and Chief Executive Kieran Gallahue told Barrons.com during a recent interview.
But a focus on enhancing patient safety sets CareFusion apart from other hospital-equipment companies. That and rising infusion-pump sales following last year's mammoth recall by rival Baxter International's (BAX) led Barrons.com to write bullishly about the stock in June 2010 (see Weekday Trader, "A Stock Play on Safer Hospitals," June 22, 2010).
To read the full article please visit Barrons.com
To read more about CareFusion please visit Patient Safety & Quality Healthcare
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