We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why You Should Retain CONMED (CNMD) Stock for Now
Read MoreHide Full Article
CONMED Corporation (CNMD - Free Report) is well poised for growth in the coming quarters, courtesy of its broad product spectrum. The optimism, led by the solid first-quarter 2023 performance and a potential General Surgery, is expected to contribute further. However, headwinds from regulatory requirements and data security threats persist.
This Zacks Rank #3 (Hold) company’s shares have risen 53.4% year to date compared with the industry’s 13.8% growth. The S&P 500 Index has gained 15.7% during the same time frame.
CONMED, the renowned global medical products manufacturer specializing in surgical instruments and devices, has a market capitalization of $4.09 billion. The company projects 18% growth over the next five years and expects to maintain its strong performance going forward.
Image Source: Zacks Investment Research
Its earnings surpassed estimates in two of the trailing four quarters, missed once and met in the other, delivering a negative average surprise of 10.54%.
Let’s delve deeper.
Potential in General Surgery: The segment 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 a competitive edge in the MedTech space. One of these products, the Anchor Tissue Retrieval bag deserves a special mention. It is one of the major platforms in the company’s specimen bag portfolio.
Broad Product Spectrum: CONMED offers a broad line of surgical products, including 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 are 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.
Solid Recurring Revenue Base: Approximately 80% of CONMED’s revenues are recurring, derived from the sale of disposable single-use products. The remaining 20% comes from sales of capital equipment (such as powered drills and saws for surgery, electrosurgical generators, video-imaging cameras, fluid control systems and surgical hand-pieces). This, in turn, creates demand for complementary single-use items.
Hospitals and clinics are expanding the use of single-use, disposable products. This endeavor is aimed at reducing expenses related to sterilizing surgical instruments and products following surgery.
CONMED’s revenues totaled $295.5 million in first-quarter 2023, up 21.9% year over year. Additional sales from newly-acquired businesses contributed approximately 570 basis points of growth.
Using one-time disposable products also lowers the risk of patient infection and reduces post-operative care cost, which is no longer covered by Medicare.
Downsides
Regulatory Requirements: Substantially, all CONMED 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 constant review by the FDA for compliance with the Quality System Regulations.
Dismal margins: Although CONMED recorded strong growth across all segments in the first quarter, inflationary pressures continued to hurt margins. Gross margin declined 350 basis points to 52.6%. The company recorded a year-over-year decline of 43.3% in operating income during the quarter. Higher costs and expenses are likely to continue for the rest of 2023.
Estimate Trend
CONMED is witnessing a positive estimate revision trend for 2023. In the past 60 days, the Zacks Consensus Estimate for earnings has improved from $3.40 per share to $3.41.
The same for the company’s second-quarter revenues is pegged at $305.9 million, indicating a 10.4% improvement from the year-ago quarter’s reported number.
Alcon has an estimated long-term growth rate of 14.9%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 8.85%.
ALC’s shares have rallied 17.7% year to date compared with the industry’s 5.9% growth.
DexCom has an estimated long-term growth rate of 40.4%. Its earnings surpassed estimates in three of the trailing four quarters and met the same once, delivering an average surprise of 15.19%.
DXCM’s shares have risen 11.9% year to date compared with the industry’s 5.9% growth.
Hologic has an estimated earnings growth rate of 4.1% for fiscal 2024. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 27.32%.
HOLX’s shares have risen 3.6% year to date compared with the industry’s 5.9% growth.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Shutterstock
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 the solid first-quarter 2023 performance and a potential General Surgery, is expected to contribute further. However, headwinds from regulatory requirements and data security threats persist.
This Zacks Rank #3 (Hold) company’s shares have risen 53.4% year to date compared with the industry’s 13.8% growth. The S&P 500 Index has gained 15.7% during the same time frame.
CONMED, the renowned global medical products manufacturer specializing in surgical instruments and devices, has a market capitalization of $4.09 billion. The company projects 18% growth over the next five years and expects to maintain its strong performance going forward.
Image Source: Zacks Investment Research
Its earnings surpassed estimates in two of the trailing four quarters, missed once and met in the other, delivering a negative average surprise of 10.54%.
Let’s delve deeper.
Potential in General Surgery: The segment 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 a competitive edge in the MedTech space. One of these products, the Anchor Tissue Retrieval bag deserves a special mention. It is one of the major platforms in the company’s specimen bag portfolio.
Broad Product Spectrum: CONMED offers a broad line of surgical products, including 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 are 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.
Solid Recurring Revenue Base: Approximately 80% of CONMED’s revenues are recurring, derived from the sale of disposable single-use products. The remaining 20% comes from sales of capital equipment (such as powered drills and saws for surgery, electrosurgical generators, video-imaging cameras, fluid control systems and surgical hand-pieces). This, in turn, creates demand for complementary single-use items.
Hospitals and clinics are expanding the use of single-use, disposable products. This endeavor is aimed at reducing expenses related to sterilizing surgical instruments and products following surgery.
CONMED’s revenues totaled $295.5 million in first-quarter 2023, up 21.9% year over year. Additional sales from newly-acquired businesses contributed approximately 570 basis points of growth.
Using one-time disposable products also lowers the risk of patient infection and reduces post-operative care cost, which is no longer covered by Medicare.
Downsides
Regulatory Requirements: Substantially, all CONMED 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 constant review by the FDA for compliance with the Quality System Regulations.
Dismal margins: Although CONMED recorded strong growth across all segments in the first quarter, inflationary pressures continued to hurt margins. Gross margin declined 350 basis points to 52.6%. The company recorded a year-over-year decline of 43.3% in operating income during the quarter. Higher costs and expenses are likely to continue for the rest of 2023.
Estimate Trend
CONMED is witnessing a positive estimate revision trend for 2023. In the past 60 days, the Zacks Consensus Estimate for earnings has improved from $3.40 per share to $3.41.
The same for the company’s second-quarter revenues is pegged at $305.9 million, indicating a 10.4% improvement from the year-ago quarter’s reported number.
CONMED Corporation Price
CONMED Corporation price | CONMED Corporation Quote
Stocks to Consider
Some better-ranked stocks for investors interested in the medical sector are Alcon (ALC - Free Report) , DexCom (DXCM - Free Report) and Hologic (HOLX - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Alcon has an estimated long-term growth rate of 14.9%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 8.85%.
ALC’s shares have rallied 17.7% year to date compared with the industry’s 5.9% growth.
DexCom has an estimated long-term growth rate of 40.4%. Its earnings surpassed estimates in three of the trailing four quarters and met the same once, delivering an average surprise of 15.19%.
DXCM’s shares have risen 11.9% year to date compared with the industry’s 5.9% growth.
Hologic has an estimated earnings growth rate of 4.1% for fiscal 2024. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 27.32%.
HOLX’s shares have risen 3.6% year to date compared with the industry’s 5.9% growth.