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Teleflex (TFX) Hurt by COVID-19-Led Disruption, UroLift Grows

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On Nov 16, we issued an updated research report on Teleflex Incorporated (TFX - Free Report) . The company continues to report strong growth in UroLift. However, escalating costs and expenses remain a major cause of worry. The stock currently carries a Zacks Rank #3 (Hold).

Over the past six months, Teleflex’s stock has underperformed its industry. The stock has gained 3.2% compared with the industry's 17.5% growth.

In the third quarter, on a year-over year basis, earnings and sales both declined significantly. Most of the segments registered revenue decline organically on a 12% aggregated negative impact from COVID-19. Margin debacle is another major concern. Teleflex is currently unable to ascertain the scope and duration of the pandemic as well as quantify the actual impact.

The company also anticipates material disruption caused by the evolving COVID-19 pandemic and macroeconomic environment. It further expects significant adverse financial impact of the coronavirus pandemic. This time too the company has not provided its 2020 outlook.

On a positive note, in the third quarter, in terms of UroLift, the response to the company’s national DTC campaign exceeded expectations. Web traffic increased more than 150% since the launch and another encouraging metric is that multiple urologists are now motivated to get trained on UroLift as a result of patient requests due to the campaign.

In terms of UroLift 2, since the FDA clearance on Jul 31, the company has begun a market acceptance test and received positive preliminary feedback, including the streamlining of the delivery device triggering mechanism and the reduction of waste. Teleflex is currently increasing manufacturing levels for the product ahead of the full commercial launch slated for early 2021. Regarding the UroLift ATC, the market acceptance test is well underway.

In the third quarter, the Vascular Access segment reported 6.8% growth on robust performances of PICC and EZ-IO products.  COVID-19 positively impacted the growth rates of vascular products during the third quarter by approximately 1%.

Over the past six months, Teleflex’s stock has underperformed its industry. The stock has gained 2.5% compared with the industry's 15.5% growth.

Stocks to Consider

Some better-ranked stocks from the broader medical space are ResMed (RMD - Free Report) , Thermo Fisher Scientific (TMO - Free Report) and Align Technology (ALGN - Free Report) .

ResMed’s long-term earnings growth rate is estimated at 14.5%. The company presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Thermo Fisher’s long-term earnings growth rate is estimated at 18%. It currently carries a Zacks Rank #2.

Align Technology’s long-term earnings growth rate is estimated at 18.3%. It currently carries a Zacks Rank #2.

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