Reasons to Hold Fresenius Medical Stock in Your Portfolio for Now

Fresenius Medical Care AG & Co. FMS is well-positioned for growth, backed by strategic acquisitions and partnerships, as well as a solid global foothold. However, rising costs remain a concern.Shares of this Zacks Rank #3 (Hold) company have risen 18.9% year to date against the industry’s decline of 1.9%. The S&P 500 Index has decreased 14.9% in the same time frame.Image Source: Zacks Investment ResearchThe company, with a market capitalization of $15.8 billion, is one of the largest integrated providers of products and services for individuals undergoing dialysis following chronic kidney failure. Its bottom line is anticipated to improve 19.3% over the next five years. FMS’ earnings beat estimates in all the trailing four quarters, delivering an average surprise of 7.6%.Reasons Favoring FMS’s GrowthStrategic Acquisitions & Partnerships: Fresenius Medical is advancing its growth strategy through targeted acquisitions and collaborations. The company’s $30-per-share acquisition of NxStage Medical is projected to be earnings accretive within three years, generating annual pre-tax savings of $80–$100 million. Its 2025 plan also integrates Fresenius Health Partners, InterWell Health and Cricket Health to manage 270,000 kidney disease patients with $11 billion in associated medical costs. Moreover, Fresenius Medical expanded its home dialysis reach via a distribution partnership with JMS Co., Ltd. in Japan and renewed agreements with DaVita and Aetna to improve access to home hemodialysis and strengthen value-based care offerings.Strong Global Foothold: Fresenius Medical has established a robust presence across North America, EMEA, Asia Pacific and Latin America, driven by organic growth, strategic acquisitions and public-private partnerships that have expanded its dialysis services footprint. Recent moves include entering the Israeli market and acquiring an 85% stake in India’s Sandor Nephro Services, further strengthening its global network of 3,624 clinics serving over 308,000 patients. Despite pandemic-related challenges and revenue headwinds from divestitures, the company maintained steady momentum, with regions outside North America contributing positively and same-market treatment growth reaching 2.1% in the second quarter.Strong Q2 Results: FMS exited the second quarter on a strong note, with its earnings and revenues surpassing their respective Zacks Consensus Estimate. Overall pricing momentum also supported growth in the Care Enablement segment. However, the effects of elevated mortality will likely continue to have a negative impact on sales.Per management, during the first quarter, the FME25 transformation program continued its positive momentum, delivering EUR 58 million additional sustainable savings while related one-time costs, treated as special items, amounted to EUR 53 million. The company confirmed its full-year target of approximately EUR 180 million in additional annual savings, totaling EUR 1,050 million by the end of 2027.A Factor That May Offset FMS’s GainsRising Costs & Business Optimization Hurt Short-Term Prospect: Fresenius Medical continues to grapple with labor market pressures, leading to a EUR 150–200 million rise in labor expenses despite early signs of stabilization, as the company invests further in its workforce. Inflation added another EUR 100–150 million in costs, mainly impacting supply chain and operational areas.Treatment volumes declined year over year as of Dec. 31, 2024, largely due to divestitures under the Legacy Portfolio Optimization initiative, which reduced overall treatment activity. In the United States, the termination of lower-margin acute care contracts also contributed to a 0.2% drop in Same Market Treatment Growth, compounding the effect of divestitures, while foreign currency movements further weighed on financial performance.Estimate TrendThe Zacks Consensus Estimate for 2025 revenues is pegged at $23.4 billion, indicating 11.7% year-over-year growth. The consensus mark for earnings is pinned at $2.17 per share, implying growth of 30.7% from the year-ago level.Key PicksSome better-ranked stocks in the broader medical space are Masimo MASI, Merit Medical System MMSI and West Pharmaceutical Services WST. Each stock presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Masimo shares have lost 10.4% so far this year compared with the industry’s 7.4% decline. Estimates for the company’s 2025 earnings per share have increased 1.3% to $5.30 in the past 30 days.MASI’s earnings beat estimates in each of the trailing four quarters, the average surprise being 13.8%. In the last reported quarter, it posted an earnings surprise of 8.1%.Estimates for Merit Medical’s 2025 earnings per share have increased 0.8% to $3.63 in the past 60 days. Shares of the company have lost 13.8% so far this year against the industry’s 1.1% growth.MMSI’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 12.92%. In the last reported quarter, it delivered an earnings surprise of 17.44%.Estimates for West Pharmaceutical’s 2025 earnings per share have increased 1.2% to $6.74 in the past 60 days. Shares of the company have lost 18.2% so far this year against the industry’s 1% growth.WST’s earnings beat estimates in each of the trailing four quarters, the average surprise being 16.81%. In the last reported quarter, it delivered an earnings surprise of 21.85%.Zacks Names #1 Semiconductor StockThis under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Masimo Corporation (MASI): Free Stock Analysis Report Fresenius Medical Care AG & Co. KGaA (FMS): Free Stock Analysis Report Merit Medical Systems, Inc. (MMSI): Free Stock Analysis Report West Pharmaceutical Services, Inc. (WST): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks