Invacare, analysts butt heads over earnings

Saturday, May 31, 2008

ELYRIA, Ohio--Sometimes you can’t win for winning.

Invacare released its first quarter results in late April, and CEO Mal Mixon called the company’s “significant improvement in adjusted earnings” gratifying ($3.6 million versus $1.6 million last year). Some analysts, however, disagreed, describing the first quarter performance as disappointing.

As a result, the company’s stock tumbled to a new 52-week low ($16.13 a share), prompting Invacare to respond to the analysts. The company noted that “because it does not provide quarterly earnings guidance, the investor community may project quarterly earnings that vary from management’s expectations.”

Natixis Bleichroeder financial analyst Joshua Zable also came to the company’s defense. In his report to investors on Invacare’s first-quarter earnings, he called Wall Street’s reaction “overblown.”

“We point out that there was a transition in CFO and Investor Relations responsibilities during the quarter, which could explain the Street’s confusion, and we believe a misunderstanding of the earnings in the future is less likely,” he stated.

Zable upgraded the stock to “Buy” and called the company’s current valuation “compelling.”

In its first quarter results, Invacare reported the following: North American HME sales increased 8.7%, driven primarily by sales in rehab, standard and respiratory product lines; cost reductions saved the company $3.7 million in the first quarter; DSO increased one day to 63 days; overall, net sales increased 11% to $416 million.