Jason Kritzer, vice president of Eaton Vance Management, invests in companies with a bottom-up, proprietary research approach. The portfolio manager of the Eaton Vance Worldwide Health Sciences Fund (Trades, Portfolio) invested in four companies during the first quarter: Aetna Inc. (AET, Financial), Humana Inc. (HUM, Financial), Hologic Inc. (HOLX, Financial) and Teleflex Inc. (TFX, Financial)
Aetna and Humana
Kritzer purchased 191,137 shares of Aetna at an average price of $125.48 per share and 69,017 shares of Humana at an average price of $206.75 per share. The former transaction increased the portfolio 2.11% while the latter added 1.25%.
Aetna, a Hartford, Connecticut health care benefit company, has declining operating and gross margins with the former near a 10-year low of 4.97%. Despite this, Aetna’s operating margin still outperforms 74% of global health care benefit companies, suggesting good growth potential relative to peers.
Humana, on the other hand, has margins and returns that underperform over 60% of global competitors.
Aetna and Humana mutually terminated their merger Feb. 14 following a motion from the Department of Justice to block it. Per the merger agreement, Aetna paid Humana the regulatory termination fee of $1 billion.
Hologic
The Eaton Vance vice president added 491,712 shares of Hologic at an average price of $40.77. With this transaction, Kritzer increased his portfolio 1.71%.
Hologic, a Massachusetts diagnostics products supplier, offers good growth potential for the year. The company’s margins and returns are near a 10-year high and outperform over 80% of global competitors.
Hologic reported $715.4 million in net revenues and $1.84 in diluted earnings per share during the quarter ending April 1, the latter outperforming fiscal second-quarter 2016 earnings by $1.60. CEO Steve MacMillan reported that the company’s “molecular diagnostics, surgical and international franchises” contributed to the solid earnings performance in Hologic’s fiscal second quarter. The company’s Piotroski F-score is a strong 7 out of 9, driven by consistent increases in gross margins and asset turnover over the past 10 quarters.
Teleflex
Kritzer invested in 81,894 shares of Teleflex, a Pennsylvania medical devices company. The company’s share price averaged $180.08 during the quarter ending March 31.
Teleflex has a profitability rank of 7, suggesting good short-term growth potential. The company’s operating margin is near a 10-year high of 17.46% and outperforms 84% of global competitors.
Teleflex reported a year-over-year revenue growth of 14.8%. According to CEO Benson Smith, the company had high business strength in several of its operating segments, which includes the recent acquisition of Vascular Solutions Inc. (VASC, Financial). Based on the solid fiscal first-quarter earnings results, Teleflex increased its constant currency revenue growth and earnings guidance for the year.
Disclosure: I do not have positions in the stocks mentioned.
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