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Here's Why You Should Retain CONMED (CNMD) Stock for Now
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CONMED Corporation (CNMD - Free Report) is well- poised for growth, backed by a broad product portfolio and solid potential from its core units, namely Orthopedic Surgery and General Surgery. However, tough competition remains a concern.
Over the past three months, shares of CONMED have gained 23.1% compared with the industry’s growth of 5.3%.
The company, with a market capitalization of $23.54 billion, is a major medical products manufacturer specializing in surgical instruments and devices for minimally-invasive procedures and monitoring. It anticipates an earnings improvement of 9.9% over the next five years. Moreover, it has a trailing four-quarter earnings surprise of 92.2%, on average.
Let’s take a closer look at the factors that substantiate the company’s current Zacks Rank #3 (Hold ) status.
Consistent Strength in General Surgery: This segment consists of a complete line of endo-mechanical instrumentation for minimally-invasive laparoscopic and gastrointestinal procedures, a line of cardiac monitoring products as well as electrosurgical generators and related instruments.CONMED’s unique products and solutions within the General Surgery segment are consistently providing the company a competitive edge in the MedTech space. Of the most unique products under General Surgery, the Anchor Tissue Retrieval bag deservesmention.
In fourth-quarter 2020, although overall revenues at the segment ($140.1 million) dipped 0.7% year over year, but domestically, the same rose 5.3% year over year. However, international sales fell 12.8%. Despite the capital and procedural sluggishness witnessed in the fourth quarter, AirSeal and Buffalo Filterwere combined to improve nearly 20%. Per management, these two product lines will continue to reap benefits from the increased focus on boosting operating room safety. This, in turn, might contribute to the segment’s results in the near term.
Continued R&D Focus: CONMED’s steady focus on innovation instills investor confidence in the stock. By the end of the fourth quarter of 2018, management had announced that solid organic R&D pipeline and product innovations will provide the company a competitive edge. Additionally, CONMED’s surging R&D expenses reflect focus on innovation.
Broad Product Spectrum: CONMED offers a broad surgical productmenu. In the recent past, the company introduced the MicroFree platform in Orthopedicscomprising the TruShot, the Y-Knot Pro and the CRYSTALVIEW Pump. This expanded product suite can accelerate the company’s top line. Products like the IM8000 surgical visualization system and the Edge Ablation system will drive the top line going forward.
Furthermore, CONMED’s AssistArm technology delivers unique limb positioning techniques. Other products including 3 sports medicine products, 3 endomechanical offerings, an electrosurgical council and a new 2D Arthroscopy video system areworth mentioning.
The company saw continued solid demand for AirSeal and Buffalo Filter product lines throughout the fourth quarter. This was led by enhanced clinical training, improved surgical safety protocols and increasing access to medical facilities. Both these product lines saw strong growth during the quarter as hospitals around the world focused on bettering operating rooms safety. Per the fourth-quarter 2020 earnings call, CONMED is steadily offering profitable products, which are more clinically effective, through innovation.
What’s Deterring the Stock?
Cut-throat Competition in MedTech: CONMED operates in a highly competitive environmentamid rivals like Johnson & Johnson, Medtronic, Smith & Nephew and Stryker Corporation. These organizations may boast greater resources and larger research and development budgets than CONMED. Furthermore, CONMED lags the larger orthopedic companies in product bundling arrangements, which lend those a greater competitive edge.
EstimateTrend
For the first quarter of 2021, the Zacks Consensus Estimate for revenues is pegged at $217.4 million, indicating an improvement of 1.6% from the prior-year period’s reported figure. The same for earnings stands at 43 cents per share, suggesting afall of 15.7% from the year-ago quarter’s reported number.
Align Technology has a projected long-term earnings growth rate of 19%.
Abbott has a projected long-term earnings growth rate of 14.1%.
Hologic has an estimated long-term earnings growth rate of 15.4%.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Here's Why You Should Retain CONMED (CNMD) Stock for Now
CONMED Corporation (CNMD - Free Report) is well- poised for growth, backed by a broad product portfolio and solid potential from its core units, namely Orthopedic Surgery and General Surgery. However, tough competition remains a concern.
Over the past three months, shares of CONMED have gained 23.1% compared with the industry’s growth of 5.3%.
The company, with a market capitalization of $23.54 billion, is a major medical products manufacturer specializing in surgical instruments and devices for minimally-invasive procedures and monitoring. It anticipates an earnings improvement of 9.9% over the next five years. Moreover, it has a trailing four-quarter earnings surprise of 92.2%, on average.
Let’s take a closer look at the factors that substantiate the company’s current Zacks Rank #3 (Hold ) status.
Consistent Strength in General Surgery: This segment consists of a complete line of endo-mechanical instrumentation for minimally-invasive laparoscopic and gastrointestinal procedures, a line of cardiac monitoring products as well as electrosurgical generators and related instruments.CONMED’s unique products and solutions within the General Surgery segment are consistently providing the company a competitive edge in the MedTech space. Of the most unique products under General Surgery, the Anchor Tissue Retrieval bag deservesmention.
In fourth-quarter 2020, although overall revenues at the segment ($140.1 million) dipped 0.7% year over year, but domestically, the same rose 5.3% year over year. However, international sales fell 12.8%. Despite the capital and procedural sluggishness witnessed in the fourth quarter, AirSeal and Buffalo Filterwere combined to improve nearly 20%. Per management, these two product lines will continue to reap benefits from the increased focus on boosting operating room safety. This, in turn, might contribute to the segment’s results in the near term.
Continued R&D Focus: CONMED’s steady focus on innovation instills investor confidence in the stock. By the end of the fourth quarter of 2018, management had announced that solid organic R&D pipeline and product innovations will provide the company a competitive edge. Additionally, CONMED’s surging R&D expenses reflect focus on innovation.
Broad Product Spectrum: CONMED offers a broad surgical productmenu. In the recent past, the company introduced the MicroFree platform in Orthopedicscomprising the TruShot, the Y-Knot Pro and the CRYSTALVIEW Pump. This expanded product suite can accelerate the company’s top line. Products like the IM8000 surgical visualization system and the Edge Ablation system will drive the top line going forward.
Furthermore, CONMED’s AssistArm technology delivers unique limb positioning techniques. Other products including 3 sports medicine products, 3 endomechanical offerings, an electrosurgical council and a new 2D Arthroscopy video system areworth mentioning.
The company saw continued solid demand for AirSeal and Buffalo Filter product lines throughout the fourth quarter. This was led by enhanced clinical training, improved surgical safety protocols and increasing access to medical facilities. Both these product lines saw strong growth during the quarter as hospitals around the world focused on bettering operating rooms safety. Per the fourth-quarter 2020 earnings call, CONMED is steadily offering profitable products, which are more clinically effective, through innovation.
What’s Deterring the Stock?
Cut-throat Competition in MedTech: CONMED operates in a highly competitive environmentamid rivals like Johnson & Johnson, Medtronic, Smith & Nephew and Stryker Corporation. These organizations may boast greater resources and larger research and development budgets than CONMED. Furthermore, CONMED lags the larger orthopedic companies in product bundling arrangements, which lend those a greater competitive edge.
EstimateTrend
For the first quarter of 2021, the Zacks Consensus Estimate for revenues is pegged at $217.4 million, indicating an improvement of 1.6% from the prior-year period’s reported figure. The same for earnings stands at 43 cents per share, suggesting afall of 15.7% from the year-ago quarter’s reported number.
Stocks to Consider
Some better-ranked stocks from the broader medical space are Align Technology (ALGN - Free Report) , Abbott Laboratories (ABT - Free Report) and Hologic (HOLX - Free Report) . While Align Technology currently sports a Zacks Rank #1 (Strong Buy), the other two presently carrya Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Align Technology has a projected long-term earnings growth rate of 19%.
Abbott has a projected long-term earnings growth rate of 14.1%.
Hologic has an estimated long-term earnings growth rate of 15.4%.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>