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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 in the coming quarters, backed by its broad product spectrum. A robust second-quarter 2021 performance, along with strength in General Surgery, is expected to contribute further. Data security threats and forex woes persist.

Over the past year, this Zacks Rank #3 (Hold) stock has gained 43% compared with 32.7% growth of the industry it belongs to and 32.7% rise of the S&P 500.

The renowned global medical products manufacturer, specializing in surgical instruments and devices, has a market capitalization of $3.58 billion. The company projects 9.9% growth for the next five years and expects to maintain its strong performance. It has delivered an earnings surprise of 80.18% for the past four quarters, on average.

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Let’s delve deeper.

Strength in General Surgery: CONMED’s General Surgery unit 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 have been providing the company a competitive edge in the MedTech space. In the second quarter of 2021, the segment performed impressively both domestically and internationally.

Per management, the AirSeal and Buffalo Filter product lines will continue to reap the benefits of the increased focus on boosting operating room safety, thereby raising our optimism.

Broad Product Spectrum: CONMED offers a broad line of surgical products, which includes several new devices in the Orthopedic, Laparoscopic, Robotic, Open Surgery, Gastroenterology, Pulmonary and Cardiology sections. Products like Hi-Fi Tape and Hi-Fi Suture represent a critical component of repair security in the rotator cuff repair space.

Other notable offerings include the MicroFree platform in Orthopedics, the TruShot, the Y-Knot Pro and the CRYSTALVIEW Pump. The Anchor Tissue Retrieval bag is the most unique product under the General Surgery arm. Products like the IM8000 surgical visualization system and the Edge Ablation system hold the potential to drive the top line in future. CONMED, during the second quarter of 2021, continued to derive benefits from robust sales of both AirSeal and Buffalo Filter.

Strong Q2 Results: CONMED’s solid second-quarter 2021 results buoy optimism. The company witnessed strong performances across its Orthopedic and General Surgery units. It saw sales growth in both its domestic and overseas markets. Per management, the company displayed strength and agility despite a tough second-quarter operating environment resulting from the impact of COVID-19 on its customers’ surgical procedure volumes. Expansion of gross margin bodes well for the stock. A raised full-year outlook also raises our optimism.

Downsides

Forex Woes: CONMED derives a significant portion of its revenues (approximately 44% of 2020 consolidated net sales) from customers outside the United States. The company has sales subsidiaries in a significant number of countries in Europe as well as Australia, Canada, China, Japan and Korea. In countries where the company has a direct presence, its sales are denominated in the local currency. As a significant portion of CONMED’s operations consists of sales activities in jurisdictions outside the United States, its financial results may be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the markets in which the company distributes its products.

Data Security Threats: CONMED relies extensively on information technology (IT) systems for the storage, processing and transmission of its electronic, business-related information assets necessary to conduct business. The data that the company stores and processes may include customer payment information and other types of sensitive business-related information. In limited instances, CONMED may also come into possession of information related to patients of its physician customers.

Estimate Trend

CONMED is witnessing a positive estimate revision trend for 2021. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 1.3% north to $3.19.

The Zacks Consensus Estimate for the company’s third-quarter 2021 revenues is pegged at $256.6 million, suggesting a 7.9% improvement from the year-ago quarter’s reported number.

Key Picks

Some better-ranked stocks from the broader medical space are Henry Schein, Inc. (HSIC - Free Report) , IDEXX Laboratories, Inc. (IDXX - Free Report) and Intuitive Surgical, Inc. (ISRG - Free Report) .

Henry Schein’s long-term earnings growth rate is estimated at 13.9%. 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.

IDEXX’s long-term earnings growth rate is estimated at 19.9%. It currently has a Zacks Rank #2.

Intuitive Surgical’s long-term earnings growth rate is estimated at 9.7%. It currently flaunts a Zacks Rank #1.