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Here's Why You Should Retain Teleflex (TFX) Stock for Now
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Teleflex (TFX - Free Report) is well-poised to grow in the coming quarters, backed by the intense performances in its Vascular, Interventional and Surgical businesses. The company has witnessed stable demand across stable utilization in the acute care setting in the global markets. Conversely, escalating expenses and foreign exchange headwinds remain a concern.
In the past year, this Zacks Rank #3 (Hold) stock has increased 3.4% compared with the 1.8% growth of the industry and the 19.7% rise of the S&P 500 composite.
Teleflex, the global provider of medical technologies, has a market capitalization of $9.24 billion. The company has an earnings yield of 6.74% against the industry’s -7.76%. TFX surpassed estimates in each of the trailing four quarters, delivering an average earnings surprise of 4.52%.
Let’s delve deeper.
Tailwinds
Vascular Business Grows: During the second quarter of 2023, Vascular Access revenues increased 6.6%. The company executed well during the second quarter. Initial launch activities for its next-generation Arrow VPS Rhythm DLX navigation device and the new Arrow PICC pre-loaded with the NaviCurve Stylet have generated a positive customer response. Over the long term, TFX remains positioned for dependable growth with category leadership in Central Venous Catheters and midlines, anticipated share gains with a novel coated PICC portfolio and new product introductions.
Interventional Access revenues grew 9.6% year over year. Procedure volumes remained stable in the quarter and TFX continues to benefit from its diversified portfolio. Balloon pumps, right heart catheters and access and closure all grew at double-digit rates. MANTA continues on a trajectory for strong double-digit growth in 2023.
Business in Asia Holds Long-Term Potential: Observing strong demand for the company’s comprehensive product line in emerging economies, Teleflex is currently focusing on expansion in densely populated geographies like Asia. The company has a solid market base for its Interventional Access and Anesthesia products in this region. In 2022, TFX generated 10% of total revenues from Asian regions.
Image Source: Zacks Investment Research
During the second quarter of 2023, Asia registered strong growth with 19.1% year-over-year growth and continues to be an essential growth driver for Teleflex. The company experienced stable demand across the region, including growth in excess of 20% in China. From a product perspective, TFX saw solid double-digit growth in Interventional Access and Interventional Urology.
Favorable Solvency: At the end of the second quarter of 2023, Teleflex reported cash and cash equivalents of $250.82 million, while the current portion of the debt remained significantly lower at $88 million. This shows the company has sufficient cash for debt repayment despite the economic slowdown. In addition, TFX’s debt-to-capital ratio totaled 27% compared with the industry’s 31.5% as of Jun 30, 2023.
Downsides
Rising Expenses – a Concern: In the second quarter, the company’s adjusted gross margin was affected by continued cost inflation, product recalls and an unfavorable impact on productivity due to raw material supply. SG&A expenses rose 3%, while R&D expenses increased 6.8% compared to the last year.
A Tough Competitive Landscape: Teleflex competes with companies ranging from small startup enterprises to more extensive and established companies with access to significantly greater financial resources. Furthermore, extensive product research and development and rapid technological advances characterize the market.
Estimate Trend
The Zacks Consensus Estimate for TFX’s 2023 earnings per share (EPS) has decreased from $13.29 to $13.26 in the past 90 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $2.96 billion. This suggests a 6.0% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Quanterix (QTRX - Free Report) and Align Technology (ALGN - Free Report) , each carrying a Zacks Rank #2 (Buy).
DaVita has gained 25.5% against the industry’s 8.9% decline in the past year.
Estimates for Quanterix’s 2023 loss per share have remained constant at 97 cents in the past 30 days. Shares of the company have surged 141.5% in the past year compared with the industry’s fall of 5.6%.
QTRX’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 30.39%. In the last reported quarter, it posted an earnings surprise of 55.56%.
Estimates for Align Technology’s 2023 earnings have moved up from $8.77 to $8.78 per share in the past 30 days. Shares of the company have increased 27% in the past year compared with the industry’s rise of 14.3%.
ALGN’s earnings beat estimates in three of the trailing four quarters and missed in one. In the last reported quarter, it posted an earnings surprise of 9.90%.
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Here's Why You Should Retain Teleflex (TFX) Stock for Now
Teleflex (TFX - Free Report) is well-poised to grow in the coming quarters, backed by the intense performances in its Vascular, Interventional and Surgical businesses. The company has witnessed stable demand across stable utilization in the acute care setting in the global markets. Conversely, escalating expenses and foreign exchange headwinds remain a concern.
In the past year, this Zacks Rank #3 (Hold) stock has increased 3.4% compared with the 1.8% growth of the industry and the 19.7% rise of the S&P 500 composite.
Teleflex, the global provider of medical technologies, has a market capitalization of $9.24 billion. The company has an earnings yield of 6.74% against the industry’s -7.76%. TFX surpassed estimates in each of the trailing four quarters, delivering an average earnings surprise of 4.52%.
Let’s delve deeper.
Tailwinds
Vascular Business Grows: During the second quarter of 2023, Vascular Access revenues increased 6.6%. The company executed well during the second quarter. Initial launch activities for its next-generation Arrow VPS Rhythm DLX navigation device and the new Arrow PICC pre-loaded with the NaviCurve Stylet have generated a positive customer response. Over the long term, TFX remains positioned for dependable growth with category leadership in Central Venous Catheters and midlines, anticipated share gains with a novel coated PICC portfolio and new product introductions.
Interventional Access revenues grew 9.6% year over year. Procedure volumes remained stable in the quarter and TFX continues to benefit from its diversified portfolio. Balloon pumps, right heart catheters and access and closure all grew at double-digit rates. MANTA continues on a trajectory for strong double-digit growth in 2023.
Business in Asia Holds Long-Term Potential: Observing strong demand for the company’s comprehensive product line in emerging economies, Teleflex is currently focusing on expansion in densely populated geographies like Asia. The company has a solid market base for its Interventional Access and Anesthesia products in this region. In 2022, TFX generated 10% of total revenues from Asian regions.
Image Source: Zacks Investment Research
During the second quarter of 2023, Asia registered strong growth with 19.1% year-over-year growth and continues to be an essential growth driver for Teleflex. The company experienced stable demand across the region, including growth in excess of 20% in China. From a product perspective, TFX saw solid double-digit growth in Interventional Access and Interventional Urology.
Favorable Solvency: At the end of the second quarter of 2023, Teleflex reported cash and cash equivalents of $250.82 million, while the current portion of the debt remained significantly lower at $88 million. This shows the company has sufficient cash for debt repayment despite the economic slowdown. In addition, TFX’s debt-to-capital ratio totaled 27% compared with the industry’s 31.5% as of Jun 30, 2023.
Downsides
Rising Expenses – a Concern: In the second quarter, the company’s adjusted gross margin was affected by continued cost inflation, product recalls and an unfavorable impact on productivity due to raw material supply. SG&A expenses rose 3%, while R&D expenses increased 6.8% compared to the last year.
A Tough Competitive Landscape: Teleflex competes with companies ranging from small startup enterprises to more extensive and established companies with access to significantly greater financial resources. Furthermore, extensive product research and development and rapid technological advances characterize the market.
Estimate Trend
The Zacks Consensus Estimate for TFX’s 2023 earnings per share (EPS) has decreased from $13.29 to $13.26 in the past 90 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $2.96 billion. This suggests a 6.0% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Quanterix (QTRX - Free Report) and Align Technology (ALGN - Free Report) , each carrying a Zacks Rank #2 (Buy).
DaVita has an estimated long-term growth rate of 12.7%. DVA’s earnings surpassed estimates in three of the trailing four quarters and missed once, with an average surprise of 21.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DaVita has gained 25.5% against the industry’s 8.9% decline in the past year.
Estimates for Quanterix’s 2023 loss per share have remained constant at 97 cents in the past 30 days. Shares of the company have surged 141.5% in the past year compared with the industry’s fall of 5.6%.
QTRX’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 30.39%. In the last reported quarter, it posted an earnings surprise of 55.56%.
Estimates for Align Technology’s 2023 earnings have moved up from $8.77 to $8.78 per share in the past 30 days. Shares of the company have increased 27% in the past year compared with the industry’s rise of 14.3%.
ALGN’s earnings beat estimates in three of the trailing four quarters and missed in one. In the last reported quarter, it posted an earnings surprise of 9.90%.