October 26, 2009 - Hospira, Inc. (HSP-NYSE) a specialty pharmaceutical and medication delivery company, engages in the development, manufacture, and marketing of pharmaceuticals and medication delivery systems in the United States and internationally. It offers generic acute-care and oncology injectables, as well as integrated infusion therapy and medication management systems for hospitals, wholesalers, integrated delivery networks, and alternate site providers, such as clinics, home healthcare providers, and long-term care facilities.

The company also offers infusion therapy solutions and supplies that include I.V. solutions for general use; and I.V. nutrition products and solutions for the washing and cleansing of wounds or surgical sites. In addition, it provides medication management systems that include electronic drug delivery pumps, safety software, and administration sets that are used to deliver I.V. fluids and medications.

Further, the company offers gravity administration sets, hemodynamic monitoring systems used to monitor cardiac function and blood flow in critically ill patients, disposable blood-pressure-sensing devices, blood sampling systems, catheter systems, and needle stick safety products. Additionally, Hospira is involved in the provision of formulation development, and injectable and oral drug filling and finishing services. The company was founded in 2003 and is headquartered in LakeForest, Illinois.

Hard to find good growth in this economy. But Hospira is one stock that delivers. In the second quarter, the company raised earnings 28%. One division, Specialty Injectable, saw increased demand due to greater wholesale purchases of anti-infective products, first to market drugs and new pharmacy contracts. On the waning side was the Medicaction Management Systems group which fell below record results reported last year in the second quarter as customers cut their budgets due to the faltering economy.

However, earnings keep growing, partly due to cost cuts while sales increase. In 2006, earnings per share (eps) were $1.93, then $2.19, followed by $2.53. This year, consensus among 8 analysts following the company is for $2.84, then $3.25 in 2010. Next earnings announcement will be on October 27 for third quarter results. Consensus estimate is for 68 cents, up from 63 cents in the same quarter last year. Look for 82 cents for the fourth quarter's eps, a little ahead of the 78 cents in the fourth last year.

Hospira just launched a generic injectable for Stage III colon cancer. It's a version of Sanofi-Avantis Eloxatin and the first generic of this drug to be in solution form. The company also recently received FDA approval for 6 new versions of heparin, a drug used to prevent clot formation in central venous catheters and for blood thinning. This approval allows the company to offer the drug in more sizes and strengths and in a variety of delivery formats.

Management is focusing on core operations, having sold its Critical Care product line for about $35 million to ICU Medical. Injectables are getting almost all the attention now.

More numbers: Market Cap is $7.41 billion. Forward P/E is 14. Price to book is 3.39. Book value is $13.62. Operating margin in the last 12 months was 15.53 while Profit margin was 10.32. Return on equity was 17.86%. Return on assets was 6.75%. Total revenues in 2008 were $3629.5 billion, up from $3.4362 billion in 2007. This year analysts expect $3.72 billion, next year $3.92 billion. Total cash is $608.5 million, making $3.78 per share. Total debt is $2.11 billion or 44% of capital. Current ratio is 2.22. Beta is .92. 52- week low was $21.21, set on March 9, 2009. The 52-week high was on October 20, 2009, at $47.54. The all-time high for the stock was in 2006 at $48 a share. There are 161.9 million shares outstandin.9 million shares outstanding with Institutions owning 84% of the float (160.76 million). There is no dividend.

Hospira should be of interest to most investors. It's growing sales and profits in a weak global economy. (77% of sales were in the Americas in 2008, 16% in Europe, Middle East and Africa (EMEA), and Asia/Pacific was 7%.) The company seems able to prosper even in hard times. When the economic rebound comes, it should do even better. That's the kind of stock most investors will find worthwhile exploring.

Having said all the good things, look at some of the current valuations. They're on the high side, from a P/E of 20 to a Price to Book of 3.39 to a Price to sales of 2.03. Those are lofty numbers. Many investors obviously already love this stock.

- Company Web site: www.hospira.com

- Ted Allrich