Back to top

Analyst Blog

We reiterate our Neutral recommendation for Greatbatch Inc. (GB - Analyst Report). Second-quarter fiscal 2011 earnings per share of 43 cents met the Zacks Consensus Estimate. Revenues rose 4% year over year to $146.5 million, topping the Zacks Consensus Estimate of $141 million.

Sales were boosted by solid double-digit growth at the company’s Orthopedic franchise backed by favorable foreign exchange translation, which offset declines across other businesses. Greatbatch lifted its revenue and earnings forecast for the full year.

Orthopedic revenues surged 24% in the quarter, fueled by customer product launches, market share gains as well as favorable foreign currency impact. Vascular Access sales fell 2% while CRM/Neuromodulation revenues edged down 1%, hurt by sustained pricing pressure and sluggishness in the CRM market. Revenues from Greatbatch’s Electrochem segment dipped 2% in the quarter.

Greatbatch de-leveraged its balance sheet during the second quarter by repaying long-term debt worth $20 million. The company plans to continue to use its cash flows to fund R&D initiatives and repay debt.

Greatbatch is a leading producer and supplier of batteries, capacitors and components used in implantable medical devices. The company’s top customers include Boston Scientific (BSX - Analyst Report), Johnson & Johnson (JNJ - Analyst Report), Medtronic (MDT - Analyst Report) and St. Jude (STJ - Analyst Report).

Greatbatch has been acquiring complementary businesses over the last few years to boost sales. Moreover, the company’s pipeline is healthy with a number of products currently under development that are expected to support growth in the long run. Greatbatch continues to invest in developing medical devices for its major OEM clients.

A rebounding orthopedic market, market share gains coupled with customer inventory build-ups and product launches are contributing to growth in the company’s Orthopedic business. Greatbatch expects these factors to continue to boost its orthopedic sales through 2011. 

We feel that operating results, moving forward, will be supported by the company’s strong Orthopedic business and strategic investments. Moreover, synergies from cost-cutting and restructuring initiatives are expected to support margin expansion.

However, a soft CRM market may prove to be challenging for Greatbatch for the remainder of 2011. We are also cognizant of the pricing headwind. Our recommendation on the stock is backed by a short-term Zacks #3 Rank (Hold).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%