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Teleflex (TFX) OEM Arm Grows, Supply Issue Persists
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Teleflex (TFX - Free Report) continues to report improvement in revenues, banking on balanced growth across all segments and geographies. Yet, tough competition and pricing pressure also weigh on the stock. The stock currently carries a Zacks Rank #3 (Hold).
Teleflex exited the third quarter of 2022 with better-than-expected earnings. When excluding UroLift and adjusting for the Respiratory divestiture, the remaining 88% of the company’s business grew at an underlying rate of 4.3% in the third quarter. This growth continued to reflect the benefit of Teleflex's diversified portfolio, which has been purposely built to target the care of critically ill patients.
Teleflex saw improvement in revenues as the third quarter progressed, with September revenues strengthening over July and August. The Original Equipment Manufacturer and Development Services (OEM) business unit drove double-digit year-over-year revenue growth on a constant currency basis. While the Interventional business unit grew approximately 9%. The Surgical business registered mid-single-digit constant currency growth year over year. From a geographic perspective, Teleflex saw strong results in Asia, which continues to be an important growth driver for Teleflex.
Following the $976-million acquisition of Vascular Solutions, there has been accelerated growth within Teleflex’s vascular and interventional access product portfolios.
In the third quarter, within Vascular Access, revenues declined 0.8% on tough year-over-year comparisons due to a reduction in COVID patients in the intensive care unit in the United States. According to Teleflex, the company’s category leadership in central venous catheters and midline, along with the novel coated PICC portfolio, continues to position it for durable growth.
The Interventional business registered net revenue growth of 8.9% at CER during the third quarter. The company continues to invest in its interventional portfolio, including complex catheters and MANTA, its large bore closure device. MANTA revenues were as expected in the quarter, with usage continuing to expand both in the United States and in international markets.
On the flip side, Teleflex’s third-quarter revenues fell short of estimates. The company exhibited a year-over-year decline across the Americas. Lower revenues from the manufacturing supply-and-transition agreement associated with the prior divestiture of the Respiratory assets negatively impacted Americas growth by 2.1%, implying a flattish underlying performance for the quarter.
Teleflex lowered its adjusted EPS outlook for 2022, indicating lackluster performance in the coming period, which increased investors’ concern. For UroLift, the company currently assumes 2022 revenues to be roughly $320 million, down from the prior guidance of $335 million.
Over the past year, Teleflex has underperformed the industry. The stock has lost 24.1% in this period, compared with a 19.9% decline of the industry.
Key Picks
Some better-ranked stocks in the broader medical space that investors can consider are ShockWave Medical, Inc. (SWAV - Free Report) , Orthofix Medical Inc. (OFIX - Free Report) and Merit Medical System (MMSI - Free Report) .
ShockWave Medical, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 33.1% for 2023. The company’s earnings surpassed estimates in all the trailing four quarters, the average beat being 180.1%.
ShockWave Medical has outperformed its industry in the past year. SWAV has gained 35% against the industry’s 32.6% decline in the past year.
Orthofix Medical, currently carrying a Zacks Rank #1 (Strong Buy), reported third-quarter 2022 adjusted EPS of 13 cents, which beat the Zacks Consensus Estimate by a stupendous 550%. Revenues of $114 million outpaced the consensus mark by 2.7%.
Orthofix Medical has an estimated next-year growth rate of 58.97%. OFIX’s earnings surpassed estimates in the trailing three quarters and missed in one, the average being 129.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Merit Medical, currently carrying a Zacks Rank of 2, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.
Merit Medical has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.
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Teleflex (TFX) OEM Arm Grows, Supply Issue Persists
Teleflex (TFX - Free Report) continues to report improvement in revenues, banking on balanced growth across all segments and geographies. Yet, tough competition and pricing pressure also weigh on the stock. The stock currently carries a Zacks Rank #3 (Hold).
Teleflex exited the third quarter of 2022 with better-than-expected earnings. When excluding UroLift and adjusting for the Respiratory divestiture, the remaining 88% of the company’s business grew at an underlying rate of 4.3% in the third quarter. This growth continued to reflect the benefit of Teleflex's diversified portfolio, which has been purposely built to target the care of critically ill patients.
Teleflex saw improvement in revenues as the third quarter progressed, with September revenues strengthening over July and August. The Original Equipment Manufacturer and Development Services (OEM) business unit drove double-digit year-over-year revenue growth on a constant currency basis. While the Interventional business unit grew approximately 9%. The Surgical business registered mid-single-digit constant currency growth year over year. From a geographic perspective, Teleflex saw strong results in Asia, which continues to be an important growth driver for Teleflex.
Teleflex Incorporated Price
Teleflex Incorporated price | Teleflex Incorporated Quote
Following the $976-million acquisition of Vascular Solutions, there has been accelerated growth within Teleflex’s vascular and interventional access product portfolios.
In the third quarter, within Vascular Access, revenues declined 0.8% on tough year-over-year comparisons due to a reduction in COVID patients in the intensive care unit in the United States. According to Teleflex, the company’s category leadership in central venous catheters and midline, along with the novel coated PICC portfolio, continues to position it for durable growth.
The Interventional business registered net revenue growth of 8.9% at CER during the third quarter. The company continues to invest in its interventional portfolio, including complex catheters and MANTA, its large bore closure device. MANTA revenues were as expected in the quarter, with usage continuing to expand both in the United States and in international markets.
On the flip side, Teleflex’s third-quarter revenues fell short of estimates. The company exhibited a year-over-year decline across the Americas. Lower revenues from the manufacturing supply-and-transition agreement associated with the prior divestiture of the Respiratory assets negatively impacted Americas growth by 2.1%, implying a flattish underlying performance for the quarter.
Teleflex lowered its adjusted EPS outlook for 2022, indicating lackluster performance in the coming period, which increased investors’ concern. For UroLift, the company currently assumes 2022 revenues to be roughly $320 million, down from the prior guidance of $335 million.
Over the past year, Teleflex has underperformed the industry. The stock has lost 24.1% in this period, compared with a 19.9% decline of the industry.
Key Picks
Some better-ranked stocks in the broader medical space that investors can consider are ShockWave Medical, Inc. (SWAV - Free Report) , Orthofix Medical Inc. (OFIX - Free Report) and Merit Medical System (MMSI - Free Report) .
ShockWave Medical, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 33.1% for 2023. The company’s earnings surpassed estimates in all the trailing four quarters, the average beat being 180.1%.
ShockWave Medical has outperformed its industry in the past year. SWAV has gained 35% against the industry’s 32.6% decline in the past year.
Orthofix Medical, currently carrying a Zacks Rank #1 (Strong Buy), reported third-quarter 2022 adjusted EPS of 13 cents, which beat the Zacks Consensus Estimate by a stupendous 550%. Revenues of $114 million outpaced the consensus mark by 2.7%.
Orthofix Medical has an estimated next-year growth rate of 58.97%. OFIX’s earnings surpassed estimates in the trailing three quarters and missed in one, the average being 129.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Merit Medical, currently carrying a Zacks Rank of 2, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.
Merit Medical has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.