Analyst Nicholas Jansen of Raymond James & Associates says Alere Inc (ALR) is his favorite name of the year in the diagnostic space. He says the company has an opportunity to improve its operating margin profile over the next two to four years, largely due to the company’s new management.
“The reason why I like it now is you have a brand new management team in place that has effectively enacted a meaningful amount of change in a very short period of time. If you delve through the details they had at an analyst day in mid-March, they highlighted the opportunity to drive meaningful improvement in operating performance as organic growth recovers alongside new product initiatives like molecular,” Jansen says.
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Jansen says Alere is about to emerge as a midsingle or high-single-digit grower, and should see a re-emergence of the top line.
“When the top line recovers you should be able to leverage that into more meaningful operating margin expansion, as you have a better management team in place to be disciplined on spending and focusing on gross margin improvement through better sourcing, manufacturing footprint consolidation and the newer products have better margin,” Jansen says. “So needless to say, I think there is a great opportunity to improve their operating margin profile over the next two to four years.”
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