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Here's Why You Should Hold on to Integra (IART) Stock for Now
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Integra LifeSciences Holdings Corporation (IART - Free Report) is gaining from ongoing sales recovery across geographies and products. The company ended the third quarter of 2021 with better-than-expected results. Sales from the recently introduced CereLink ICP Monitor System buoy optimism.
However, foreign exchange fluctuation and stiff competition remain concerning.
Over the past year, the Zacks Rank #3 (Hold) stock has gained 3.1% compared with 9.8% growth of the industry. This compares to the 27% rise of the S&P 500.
The renowned medical device company has a market capitalization of $5.78 billion. Over the past five years, the company registered earnings growth of 8.9%, ahead of the industry’s 3.3% rise. The company’s long-term projected growth of 13.2% compares with the industry’s growth projection of 15.6%.
Let’s delve deeper.
Key Growth Catalysts
Solid Growth in International Business: Despite facing foreign exchange fluctuations across its international business, Integra successfully saw through certain key developments overseas. International sales within Codman Specialty Surgical have been strong in recent times, driven by growth in the core neurosurgery business and strength in certain key markets such as Europe, Canada, China and Japan.
Per Integra, the acquisition of Codman is effectively doubling the company’s international business within the segment. Sales outside the United States climbed about 10% year over year, with notable growth in Japan and China.
Strong Focus on Portfolio Optimization: Integra reshaped its portfolio with a strategic divestiture related to the ACell acquisition. In January 2021, the company announced the divestment of its Extremity Orthopedics business to focus more on its profitable business. With the divestiture, Integra claims to be in an even stronger position to capitalize on its core products and technologies in neurosurgery and regenerative medicine, and provide greater value to customers and shareholders.
In the third quarter, Integra expressed confidence about ACell to achieve robust long-term growth expectations despite the short-term debacles. Integra also launched CereLink in the United States and Europe.
Image Source: Zacks Investment Research
CSS Holds Strong Prospects: The CSS segment’s revenues grew 7.2% year over year on a reported basis (organically, up 8%) in the third quarter of 2021. The improvement can be attributed to 6% growth in global neurosurgery as well as 15% growth in instruments year over year on an organic basis.
Downsides
Stiff Competition Concerns: Integra faces significant competition in the surgical implants and medical instruments market. The company needs to be innovative on the product front in order to keep up with the competition. Moreover, consolidation trends in the industry could lead to intense pricing pressure and further competition in this niche.
Foreign Exchange Woes Stay: Integra generates significant revenues outside the United States, a portion of which are U.S. dollar-denominated transactions conducted with customers who generate revenues in currencies other than the U.S. dollar. As a result, currency fluctuations between the U.S. dollar and foreign currencies may impact the demand for the company’s products in those countries.
Estimate Trend
Integra has been witnessing a positive estimate revision trend for 2021. Over the past 90 days, the Zacks Consensus Estimate for its earnings has moved north by 4.3% to $3.15.
The Zacks Consensus Estimate for fourth-quarter 2021 revenues is pegged at $403.3 million, suggesting a 3.8% rise from the year-ago reported number.
Key Picks
A few better-ranked stocks in the broader medical space are Thermo Fisher Scientific Inc. (TMO - Free Report) , McKesson Corporation (MCK - Free Report) and NextGen Healthcare, Inc. .
Thermo Fisher’s long-term earnings growth rate is estimated at 14%. TMO’s earnings yield of 3.7% compares favorably with the industry’s (3.6%).
McKesson beat earnings estimates in each of the trailing four quarters, the average surprise being 19.9%. The company currently carries a Zacks Rank #2.
McKesson’s long-term earnings growth rate is estimated at 8.9%. MCK’s earnings yield of 9.9% compares favorably with the industry’s 3.2%.
NextGen Healthcare surpassed earnings estimates in each of the trailing four quarters, the average surprise being 16%. The company currently carries a Zacks Rank of 2.
NextGen Healthcare’s long-term earnings growth rate is estimated at 8.5%. NXGN’s earnings yield of 5.9% compares favorably with the industry’s (4.1%).
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Here's Why You Should Hold on to Integra (IART) Stock for Now
Integra LifeSciences Holdings Corporation (IART - Free Report) is gaining from ongoing sales recovery across geographies and products. The company ended the third quarter of 2021 with better-than-expected results. Sales from the recently introduced CereLink ICP Monitor System buoy optimism.
However, foreign exchange fluctuation and stiff competition remain concerning.
Over the past year, the Zacks Rank #3 (Hold) stock has gained 3.1% compared with 9.8% growth of the industry. This compares to the 27% rise of the S&P 500.
The renowned medical device company has a market capitalization of $5.78 billion. Over the past five years, the company registered earnings growth of 8.9%, ahead of the industry’s 3.3% rise. The company’s long-term projected growth of 13.2% compares with the industry’s growth projection of 15.6%.
Let’s delve deeper.
Key Growth Catalysts
Solid Growth in International Business: Despite facing foreign exchange fluctuations across its international business, Integra successfully saw through certain key developments overseas. International sales within Codman Specialty Surgical have been strong in recent times, driven by growth in the core neurosurgery business and strength in certain key markets such as Europe, Canada, China and Japan.
Per Integra, the acquisition of Codman is effectively doubling the company’s international business within the segment. Sales outside the United States climbed about 10% year over year, with notable growth in Japan and China.
Strong Focus on Portfolio Optimization: Integra reshaped its portfolio with a strategic divestiture related to the ACell acquisition. In January 2021, the company announced the divestment of its Extremity Orthopedics business to focus more on its profitable business. With the divestiture, Integra claims to be in an even stronger position to capitalize on its core products and technologies in neurosurgery and regenerative medicine, and provide greater value to customers and shareholders.
In the third quarter, Integra expressed confidence about ACell to achieve robust long-term growth expectations despite the short-term debacles. Integra also launched CereLink in the United States and Europe.
CSS Holds Strong Prospects: The CSS segment’s revenues grew 7.2% year over year on a reported basis (organically, up 8%) in the third quarter of 2021. The improvement can be attributed to 6% growth in global neurosurgery as well as 15% growth in instruments year over year on an organic basis.
Downsides
Stiff Competition Concerns: Integra faces significant competition in the surgical implants and medical instruments market. The company needs to be innovative on the product front in order to keep up with the competition. Moreover, consolidation trends in the industry could lead to intense pricing pressure and further competition in this niche.
Foreign Exchange Woes Stay: Integra generates significant revenues outside the United States, a portion of which are U.S. dollar-denominated transactions conducted with customers who generate revenues in currencies other than the U.S. dollar. As a result, currency fluctuations between the U.S. dollar and foreign currencies may impact the demand for the company’s products in those countries.
Estimate Trend
Integra has been witnessing a positive estimate revision trend for 2021. Over the past 90 days, the Zacks Consensus Estimate for its earnings has moved north by 4.3% to $3.15.
The Zacks Consensus Estimate for fourth-quarter 2021 revenues is pegged at $403.3 million, suggesting a 3.8% rise from the year-ago reported number.
Key Picks
A few better-ranked stocks in the broader medical space are Thermo Fisher Scientific Inc. (TMO - Free Report) , McKesson Corporation (MCK - Free Report) and NextGen Healthcare, Inc. .
Thermo Fisher surpassed earnings estimates in each of the trailing four quarters, the average surprise being 9.02%. The company currently carries a Zacks Rank of 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 14%. TMO’s earnings yield of 3.7% compares favorably with the industry’s (3.6%).
McKesson beat earnings estimates in each of the trailing four quarters, the average surprise being 19.9%. The company currently carries a Zacks Rank #2.
McKesson’s long-term earnings growth rate is estimated at 8.9%. MCK’s earnings yield of 9.9% compares favorably with the industry’s 3.2%.
NextGen Healthcare surpassed earnings estimates in each of the trailing four quarters, the average surprise being 16%. The company currently carries a Zacks Rank of 2.
NextGen Healthcare’s long-term earnings growth rate is estimated at 8.5%. NXGN’s earnings yield of 5.9% compares favorably with the industry’s (4.1%).