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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, courtesy of its broad product spectrum. The optimism led by a solid third-quarter 2022 performance, along with potential in General Surgery, is expected to contribute further. Headwinds from regulatory requirements and data security threats persist.
Over the past year, the Zacks Rank #3 (Hold) stock has lost 40.9% compared with 10.7% decline of the industry and 21.2% fall of the S&P 500.
The renowned global medical products manufacturer specializing in surgical instruments and devices has a market capitalization of $2.70 billion. The company projects 10.3% growth for the next five years and expects to maintain its strong performance. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and matched the same in the other, the average surprise being 4.4%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Potential in General Surgery: CONMED’s continued strength in General Surgery raises our optimism. In the third quarter of 2022, revenues in the General Surgery segment improved robustly at constant exchange rate (CER). Domestically, General Surgery sales also rose year over year on a reported basis, while international sales at CER were also strong. According to the company’s investor presentation, global General Surgery products are anticipated to grow at above-market rates on a long-term basis on the back of additional sales representatives and improving customer engagement.
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 interface 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 a unique product under the General Surgery arm.
Strong Q3 Results: CONMED’s solid third-quarter 2022 results buoy optimism. The company witnessed strong segmental performances across its Orthopedic Surgery and General Surgery units. It saw sales growth in domestic and overseas markets. The expansion of both gross and operating margins bodes well for the stock.
Downsides
Regulatory Requirements: Substantially all of CONMED’s products are classified as class II medical devices subject to regulations of numerous agencies and legislative bodies worldwide. As a manufacturer of medical devices, the company’s manufacturing processes and facilities are subject to on-site inspection and continuing review by the FDA for compliance with the Quality System Regulations.
Data Security Threats: CONMED relies extensively on information technology systems for storing, processing and transmitting its electronic, business-related information assets used in or 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.
Estimate Trend
CONMED is witnessing a negative estimate revision trend for 2022. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 5.1% south to $3.15.
The Zacks Consensus Estimate for the company’s fourth-quarter 2022 revenues is pegged at $306.5 million, suggesting an 11.9% improvement from the year-ago quarter’s reported number.
This compares to our fourth-quarter revenue estimate of $308 million, suggesting a 12.4% improvement from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Boston Scientific Corporation (BSX - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) .
AMN Healthcare, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 10.9%.
AMN Healthcare has lost 14.8% compared with the industry’s 31.1% decline in the past year.
Boston Scientific, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.3%. BSX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 1.9%.
Boston Scientific has gained 6% against the industry’s 43.4% decline over the past year.
Merit Medical, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average beat being 25.4%.
Merit Medical has gained 11.5% against the industry’s 10.7% decline over the past year.
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Here's Why You Should Retain CONMED (CNMD) Stock for Now
CONMED Corporation (CNMD - Free Report) is well-poised for growth in the coming quarters, courtesy of its broad product spectrum. The optimism led by a solid third-quarter 2022 performance, along with potential in General Surgery, is expected to contribute further. Headwinds from regulatory requirements and data security threats persist.
Over the past year, the Zacks Rank #3 (Hold) stock has lost 40.9% compared with 10.7% decline of the industry and 21.2% fall of the S&P 500.
The renowned global medical products manufacturer specializing in surgical instruments and devices has a market capitalization of $2.70 billion. The company projects 10.3% growth for the next five years and expects to maintain its strong performance. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and matched the same in the other, the average surprise being 4.4%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Potential in General Surgery: CONMED’s continued strength in General Surgery raises our optimism. In the third quarter of 2022, revenues in the General Surgery segment improved robustly at constant exchange rate (CER). Domestically, General Surgery sales also rose year over year on a reported basis, while international sales at CER were also strong. According to the company’s investor presentation, global General Surgery products are anticipated to grow at above-market rates on a long-term basis on the back of additional sales representatives and improving customer engagement.
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 interface 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 a unique product under the General Surgery arm.
Strong Q3 Results: CONMED’s solid third-quarter 2022 results buoy optimism. The company witnessed strong segmental performances across its Orthopedic Surgery and General Surgery units. It saw sales growth in domestic and overseas markets. The expansion of both gross and operating margins bodes well for the stock.
Downsides
Regulatory Requirements: Substantially all of CONMED’s products are classified as class II medical devices subject to regulations of numerous agencies and legislative bodies worldwide. As a manufacturer of medical devices, the company’s manufacturing processes and facilities are subject to on-site inspection and continuing review by the FDA for compliance with the Quality System Regulations.
Data Security Threats: CONMED relies extensively on information technology systems for storing, processing and transmitting its electronic, business-related information assets used in or 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.
Estimate Trend
CONMED is witnessing a negative estimate revision trend for 2022. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 5.1% south to $3.15.
The Zacks Consensus Estimate for the company’s fourth-quarter 2022 revenues is pegged at $306.5 million, suggesting an 11.9% improvement from the year-ago quarter’s reported number.
This compares to our fourth-quarter revenue estimate of $308 million, suggesting a 12.4% improvement from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Boston Scientific Corporation (BSX - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) .
AMN Healthcare, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 10.9%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AMN Healthcare has lost 14.8% compared with the industry’s 31.1% decline in the past year.
Boston Scientific, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.3%. BSX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 1.9%.
Boston Scientific has gained 6% against the industry’s 43.4% decline over the past year.
Merit Medical, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average beat being 25.4%.
Merit Medical has gained 11.5% against the industry’s 10.7% decline over the past year.