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Here's Why You Should Buy Integra LifeSciences Stock Now

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Integra LifeSciences (IART - Free Report) is progressing well with strategies like acquisitions, product launches and international expansion. Robust performance by the Codman Specialty Surgical (“CSS”) and Regenerative Technologies segments has been a key growth driver of late.

This $3.66-billion leader of regenerative medicines expects earnings growth of 11.9% over the next five years. Also, the company has a trailing-four quarter positive earnings surprise of 6.3%, on average.

Robust Q4 Earnings

Integra exited fourth-quarter 2019, with adjusted earnings per share beating the consensus mark. The CSS segment benefitted from integration activities from the Codman acquisition and venturing into faster-growing markets like China and Japan. Global CSS sales in the fourth quarter were led by its core neurosurgery portfolio, including product launches, strength in Europe and robust growth in China and Japan.

Expansion of both margins is encouraging as well. The 2020 guidance for organic revenue growth and adjusted EPS appear strong.

Let’s delve deeper into the other factors that substantiate the company’s Zacks Rank #2 (Buy).

CSS Segment Holds Potential: At the end of the fourth quarter, revenues from the CSS segment rose 4.1% (organic growth 5.6%). The upside was driven by the completion of all integration activities related to the Codman acquisition, scale expansion, product launches and venturing into faster-growing markets like China and Japan. This trend is expected to drive the company in the long term.


Strength in Regenerative Technologies: In the fourth quarter, the OTT segment registered 1.3% growth year over year. Organically, the segment grew 1.6% owing to sales uptick in wound reconstruction. Wound reconstruction, in turn, rose due to the company’s performance in inpatient and plastics and reconstructive portfolios. It also witnessed a positive momentum in both ankle and shoulder portfolios, which registered robust growth.

Integra expects an improvement in its international performance on benefits from the combination of new products like the ankle revision and small post baseplate along with the expansion of its established commercial team.

Solid Growth in International Business: Integra saw certain key developments on the overseas front. International sales within CSS have been strong in recent times driven by growth in core neurosurgery business and strength in certain key markets such as Europe, Canada, China, and Japan. Integra is looking forward to investment opportunities in the Asian market in order to grow its international business much faster than the United States. In line with this, the company is preparing to launch several products in China and Japan. The strong fourth-quarter performance of DuraGen in Japan, after its launch in the third quarter, buoys optimism.

However, due to foreign exchange fluctuations and tough competition, the stock has underperformed its industry. In the past year, the stock has lost 28.2% compared with 21.2% loss of its industry.

Estimates Trend

The company is witnessing a positive estimate revision trend for 2020. Over the past 30 days, the Zacks Consensus Estimate for its earnings has inched up 1 % to $3.02 per share.

The Zacks Consensus Estimate for the company’s first-quarter 2020 revenues is pegged at $369.3 million, suggesting a 2.7% rise from the year-ago reported number.

Key Picks

Some other top-ranked stocks from the broader medical space are ResMed Inc. RMD, Medtronic plc MDT and Hill-Rom Holdings, Inc. (HRC - Free Report) .

ResMed has a projected long-term earnings growth rate of 12%. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Medtronic’s long-term earnings growth rate is estimated at 7.4%. The company presently carries a Zacks Rank #2.

Hill-Rom’s long-term earnings growth rate is estimated at 11.1%. It currently carries a Zacks Rank #2.

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