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Here's Why You Should Hold on to Teleflex (TFX) Stock for Now
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Teleflex Incorporated (TFX - Free Report) has been gaining on robust segmental growth. Its international performance has also been impressive. Its better-than-expected revenues in the first quarter of 2020 buoy optimism. However, escalating expenses and pronounced impact of the coronavirus pandemic are concerning.
Over the past year, the Zacks Rank #3 (Hold) stock has outperformed its industry. The stock has gained 24.4% compared with 3.4% growth of the industry and 9.1% rise of the S&P 500.
The renowned provider of medical technology products has a market capitalization of $16.95 billion. The company projects 12% growth for the next five years and expects to maintain strong segmental performance. The company surpassed estimates in all of the trailing four quarters, the average positive surprise being 7.8%.
Let’s delve deeper.
Strong Q1 Results: Teleflex’s better-than-expected results in the first quarter of 2020 buoy optimism. We are encouraged by the robust improvement in revenues on balanced growth across majority of segments and geographies despite the virus outbreak. The UroLift momentum till the second week of March is impressive. Expansion of both margins also buoys optimism.
Robust International Business: Teleflex registered robust growth in its Americas region, primarily on strength in its Interventional Urology, Vascular Access and respiratory product categories despite the pandemic. In EMEA, the revenue uptick resulted from robust demand for Vascular Access, respiratory and Anesthesia products. Increased demand for respiratory products resulted from the need to treat patients with COVID-19.
Given the strong demand for the company’s wide product line in emerging economies, Teleflex is currently focusing on expansion in densely-populated geographies like Asia. Notably, it has a solid market base for its Interventional Access and Anesthesia products in this region.
Continued Synergy From Vascular Solution: We are optimistic about Teleflex’s accelerated growth of vascular and interventional access product portfolios post the acquisition of Vascular Solutions in February 2017. This has enabled expansion into the coronary and peripheral vascular market and generated increased cross-portfolio selling opportunities.
In the first quarter of 2020, the Vascular Access segment’s reported net revenues recorded an uptick resulting from strong growth in PICC (Peripherally Inserted Central Catheters) and EZ-IO.
Downsides
Pronounced Coronavirus Impact: We are concerned about the revenue decline due to COVID-19 in the company’s Asia business. The Interventional business revenues were hampered due to the cancellation of certain non-emergent procedures whereas the Anesthesia segment saw lower sales of laryngeal masks and certain regional Anesthesia products.
Escalating Expenses: Teleflex is currently on track with investments in research and development in order to accelerate growth from new products between 2019 and 2021. This led to cost escalation in first-quarter 2020.
Further, over the past few quarters, Teleflex has implemented a number of restructuring, realignment and cost-reduction initiatives. In spite of realizing some efficiency from these initiatives, it may fail to benefit from these or any other future initiative to the expected extent. This may also exert pressure on the bottom line.
Estimate Trend
Teleflex has been witnessing a negative estimate revision trend for 2020. Over the past 60 days, the Zacks Consensus Estimate for its earnings has moved 10.5% south to $10.37.
The Zacks Consensus Estimate for second-quarter 2020 revenues is pegged at $529.2 million, suggesting an 18.9% fall from the year-ago reported number.
Key Picks
Some better-ranked stocks from the broader medical space are Aphria Inc. , Illumina, Inc. (ILMN - Free Report) and QIAGEN N.V. (QGEN - Free Report) .
Illumina’s long-term earnings growth rate is estimated at 11%. The company presently has a Zacks Rank #2.
QIAGEN’s long-term earnings growth rate is estimated at 12.2%. It currently sports a Zacks Rank #1.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
Image: Bigstock
Here's Why You Should Hold on to Teleflex (TFX) Stock for Now
Teleflex Incorporated (TFX - Free Report) has been gaining on robust segmental growth. Its international performance has also been impressive. Its better-than-expected revenues in the first quarter of 2020 buoy optimism. However, escalating expenses and pronounced impact of the coronavirus pandemic are concerning.
Over the past year, the Zacks Rank #3 (Hold) stock has outperformed its industry. The stock has gained 24.4% compared with 3.4% growth of the industry and 9.1% rise of the S&P 500.
The renowned provider of medical technology products has a market capitalization of $16.95 billion. The company projects 12% growth for the next five years and expects to maintain strong segmental performance. The company surpassed estimates in all of the trailing four quarters, the average positive surprise being 7.8%.
Let’s delve deeper.
Strong Q1 Results: Teleflex’s better-than-expected results in the first quarter of 2020 buoy optimism. We are encouraged by the robust improvement in revenues on balanced growth across majority of segments and geographies despite the virus outbreak. The UroLift momentum till the second week of March is impressive. Expansion of both margins also buoys optimism.
Robust International Business: Teleflex registered robust growth in its Americas region, primarily on strength in its Interventional Urology, Vascular Access and respiratory product categories despite the pandemic. In EMEA, the revenue uptick resulted from robust demand for Vascular Access, respiratory and Anesthesia products. Increased demand for respiratory products resulted from the need to treat patients with COVID-19.
Given the strong demand for the company’s wide product line in emerging economies, Teleflex is currently focusing on expansion in densely-populated geographies like Asia. Notably, it has a solid market base for its Interventional Access and Anesthesia products in this region.
Continued Synergy From Vascular Solution: We are optimistic about Teleflex’s accelerated growth of vascular and interventional access product portfolios post the acquisition of Vascular Solutions in February 2017. This has enabled expansion into the coronary and peripheral vascular market and generated increased cross-portfolio selling opportunities.
In the first quarter of 2020, the Vascular Access segment’s reported net revenues recorded an uptick resulting from strong growth in PICC (Peripherally Inserted Central Catheters) and EZ-IO.
Downsides
Pronounced Coronavirus Impact: We are concerned about the revenue decline due to COVID-19 in the company’s Asia business. The Interventional business revenues were hampered due to the cancellation of certain non-emergent procedures whereas the Anesthesia segment saw lower sales of laryngeal masks and certain regional Anesthesia products.
Escalating Expenses: Teleflex is currently on track with investments in research and development in order to accelerate growth from new products between 2019 and 2021. This led to cost escalation in first-quarter 2020.
Further, over the past few quarters, Teleflex has implemented a number of restructuring, realignment and cost-reduction initiatives. In spite of realizing some efficiency from these initiatives, it may fail to benefit from these or any other future initiative to the expected extent. This may also exert pressure on the bottom line.
Estimate Trend
Teleflex has been witnessing a negative estimate revision trend for 2020. Over the past 60 days, the Zacks Consensus Estimate for its earnings has moved 10.5% south to $10.37.
The Zacks Consensus Estimate for second-quarter 2020 revenues is pegged at $529.2 million, suggesting an 18.9% fall from the year-ago reported number.
Key Picks
Some better-ranked stocks from the broader medical space are Aphria Inc. , Illumina, Inc. (ILMN - Free Report) and QIAGEN N.V. (QGEN - Free Report) .
Aphria’s long-term earnings growth rate is projected at 24.6%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Illumina’s long-term earnings growth rate is estimated at 11%. The company presently has a Zacks Rank #2.
QIAGEN’s long-term earnings growth rate is estimated at 12.2%. It currently sports a Zacks Rank #1.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>