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Here's Why You Should Retain Integra (IART) Stock Now

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Integra LifeSciences Holdings Corporation (IART - Free Report) is well-poised for growth in the coming quarters, backed by the performance of its Codman Specialty Surgical (CSS) segment. In the first quarter, the top line was well above the company’s organic revenue guidance range (approximately 2.0% to 3.5%). A favorable solvency structure also instills optimism. However, escalated expenses and stiff competition do not bode well for Integra.

In the past year, this Zacks Rank #3 (Hold) stock has decreased 38.1% compared with the industry’s 3% fall and a 1.7% rise of the S&P 500 composite.

The renowned medical device company has a market capitalization of $3.15 billion. Integra has an earnings yield of 8.58% against the industry’s yield of -6.96%. The company’s earnings surpassed estimates in three of the trailing four quarters and matched the same in the remaining one occasion, delivering an average surprise of 5.76%.

Let’s delve deeper.


Strong Prospects in CSS: Integra sees healthy demand for its industry-leading products within its CSS segment. During the first quarter, the company expanded the global CUSA (Cavitron Ultrasonic Surgical Aspirator) portfolio with the launch of the CUSA Clarity bone tip in the United States, Canada, Australia and New Zealand.

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Further, Integra is progressing well as far as resolving the electrical interference issue in the CereLink monitors is concerned and expects to relaunch the same toward the end of the third quarter of 2023. Across international business within CSS, growth in Japan was led by sales in CUSA capital and disposables and DuraGen. China benefited from the recovery of rolling COVID lockdowns and continued geographic expansion.

Impressive Q1 Performance: In the first quarter of 2023, Integra’s revenues beat the Zacks Consensus estimates while earnings were in line. Tissue Technologies registered double-digit growth, banking on the strong performances of a number of leading products in the wound reconstruction franchise such as Integra Skin, Gentrix and Cytal, along with high single-digit growth from SurgiMend. The company also launched MicroMatrix in Europe where it is seeing positive initial feedback from wounds and reconstructive surgeons.

In the CSS segment, the company also had a good start to the year with double-digit growth in the CUSA product line and programmable valves as well as strong performance in instrument sales. Integra reaffirmed its financial guidance for 2023, considering the recovery of markets prior to pandemic levels and the impact of its commercial capability build out and new products.

Stable Solvency Structure: Despite the first quarter’s total debt of $1.44 billion being quite higher than the corresponding cash and cash equivalent level of $307 million, Integra did not have any short-term-payable debt on its balance sheet at the quarter end. This is good news in terms of the company’s solvency position, particularly during the time of economic downturn.


Mounting Expenses Strain Margins: In the first quarter, Integra’s adjusted operating margin saw a 292-basis points contraction year over year, driven by a 4.2% increase in Selling, General & Administrative expenses and a 10.9% rise in Research & Development expenses. The year-over-year decline in the company’s gross margin is attributed to unfavorable product and geographic mix along with Boston quality project expenses.

Tough Competitive Pressure: The company faces significant competition in the surgical implants and medical instruments market. In addition, Integra competes with many smaller specialized companies as well as larger companies that do not otherwise focus on specialty surgical solutions. Other major players in orthopedics and tissue technologies include the DePuy/Synthes business of Johnson & Johnson, Stryker Corporation, Wright Medical Group, N.V., Smith & Nephew plc, MiMedx Group, Inc., Acelity L.P. Inc., a subsidiary of Allergan PLC, and Zimmer Biomet Holdings, Inc.

Estimate Trend

Integra has been witnessing a negative estimate revision trend for 2023. The Zacks Consensus Estimate for 2023 earnings per share (EPS) has moved from $3.46 to $3.45 in the past 30 days and to $3.30 in the past seven days.

The consensus estimate for the company’s 2023 revenues is pegged at $1.59 billion. This suggests a 1.9% rise from the year-ago reported number.

Key Picks

Some top-ranked stocks in the broader medical space are Zimmer Biomet (ZBH - Free Report) , Penumbra (PEN - Free Report) and Hologic, Inc. (HOLX - Free Report) .

Zimmer Biomet has an earnings yield of 5.72% compared to the industry’s yield of -2.31%. The company’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 7.38%. Its shares have increased 6.5% against the industry’s 34% decline in the past year.

ZBH sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Penumbra, sporting a Zacks Rank of #1 at present, has an estimated growth rate of 64.1% for 2024. The company’s shares have risen 105.2% against the industry’s 3% decrease over the past year.

PEN’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 109.4%.

Hologic, carrying a Zacks Rank #2 (Buy) at present, has an earnings yield of 4.84% compared to the industry’s yield of -7.06%. Shares of HOLX have risen 2% against the industry’s 3% fall over the past year.

The company’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 27.3%.

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