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Teleflex (TFX) Down 2.4% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Teleflex (TFX - Free Report) . Shares have lost about 2.4% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Teleflex due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Teleflex Gains Ground on Growth in Vascular Arm in Q1

Teleflex reported earnings per share (EPS) from continuing operations of $2.24 for the first quarter of 2019, up 4.2% year over year. The bottom line also surpassed the Zacks Consensus Estimate by 3.7%.

Reported EPS came in at 89 cents, down 24.6% year over year.

Net revenues from continuing operations in the first quarter rose 4.5% year over year to $613.6 million. On a year-over-year basis, the company saw organic constant currency revenue growth of 7.6%. The top line surpassed the Zacks Consensus Estimate by 0.9%

Revenues in Detail

In the first quarter, the Vascular segment recognized net revenues of $143.9 million, up 2.5% year over year at CER. The company registered strong growth in PICC (Peripherally Inserted Central Catheters) and visual navigation products.

The Interventional business registered net revenues of $103.2 million, a 17.1% rise on a year-over-year basis at CER. This upside was backed by higher sales of Vascular Solutions products.

Within Anesthesia segment, net revenues declined 1.5% at CER to $80.3 million. Growth in sales volumes of existing products and stronger new product sales during the first quarter were partially offset by price declines.

Surgical segment realized net revenues of $86.7 million, reflecting a 5% rise at CER on increased sales of Asian cliffs (ph) and Surgical Instruments.

Revenues at the Interventional Urology segment registered growth of 41.5% at CER to $59.7 million. The segment of OEM products recorded net revenues of $54.2 million, showing a 20.1% rise at CER.

Meanwhile, EMEA recorded revenue growth of 4.5% at CER to $154.6 million, driven by distributor convergence as well as increased sales of vascular access products.

Asia, OEM and Americas registered net revenues of $60.8 million, $54.2 million and $344 million, respectively (corresponding top-line growth of 11%, 20.1% and 6.7% each at CER), in the quarter under review.

Margin

Gross margin of 56.2% in the quarter under discussion contracted 23 basis points (bps) year over year despite a 4.1% improvement in gross profits to $344.7 million. Adjusted operating margin deteriorated 66 bps to 14.7% on 5.6% rise in operating expenses to $254.8 million.

Liquidity Position

The company exited the first quarter of 2019 with cash and cash equivalents of $271.2 million compared with $357.2 million at the end of 2018. Net cash provided by operating activities at the end of first-quarter 2019 was $60.2 million compared with $86.8 million a year ago.

2019 Outlook

Teleflex has reaffirmed its 2019 guidance. Revenues are expected to increase 5% to 6% from the year-ago period. This reflects an 1% unfavorable impact of foreign exchange translation. The Zacks Consensus Estimate for revenues is pegged at $2.58 billion.

The company also reaffirms full-year adjusted earnings per share from continuing operations at the $10.90-$11.10 band, suggesting an increase of 10.1% to 12.1% over 2018 and indicating a 2% negative impact from foreign exchange translation. The Zacks Consensus Estimate for the same is pegged at $11.03, within the company’s guided range.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -5.38% due to these changes.

VGM Scores

Currently, Teleflex has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Teleflex has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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