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Analyst Blog

Leading developer, manufacturer, and marketer of medical devices for the treatment of peripheral vascular disease, LeMaitre Vascular, Inc. (LMAT - Free Report) , announced the acquisition of Restore Flow Allografts – a leading organization dedicated in the research for restorative transplantation of donated human tissue (for medical treatment).

The buyout is worth $14.0 million, of which $12.0 million has been paid at the closure of the deal. The remaining $2.0 million payment is scheduled for May 10, 2018. Per management, the takeover will boost revenues in the fourth quarter and full-year 2016 by $550,000. Coming to operating income, LeMaitre expects a $200,000 decline in the fourth quarter and full year.

LeMaitre fell almost 2.5% to close at $23.30 per share following the news. However, a further analysis shows bullish market trends as the company represents a stupendous one-year return of 71.7%, higher than the S&P 500’s 5.9% over the same time frame.

Taking the effects of the Restore Flow acquisition into consideration, LeMaitre expects revenues of $23.7 million, gross margin of 72.1% and operating income of $4.5 million for the fourth quarter. For the full year, the company expects revenues of $89.6 million, gross margin of 71.3% and operating income of $16.9 million.

Our Take

A glimpse at the past acquisitions reveals noteworthy buyouts of XenoSure, OmniFlow and ProCol by LeMaitre. Meanwhile, the latest deal will help LeMaitre provide exclusive biologic solutions for peripheral bypass to the growing U.S. sales force.

We note that peripheral bypass is an important segment of the peripheral vascular surgical devices market, which is expected to reach a worth of $8.4 billion globally by 2018 at a compound annual growth rate (CAGR) of 6.3% (bcc Research report).

Zacks Rank & Other Key Picks

Currently, LeMaitre has a Zacks Rank #2 (Buy).

Better-ranked stocks in the broader medical space include Anika Therapeutics Inc. (ANIK - Free Report) , Cambrex Corporation (CBM - Free Report) and IDEXX Laboratories, Inc. (IDXX - Free Report) , all of which sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Anika Therapeutics represents a strong long-term expected growth rate of 15.00%. Notably, the company has a positive one-year return of almost 8.5%.

Cambrex Corporation has a positive one-year return of 5.4%. The company also has a promising long-term expected growth rate of 15.00%.

IDEXX Laboratories represents a stellar one-year return of 61.8%. The company has a long-term expected growth rate of almost 14.96%.

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