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Stellar Codman Surgical Sales Aid Integra Amid Supply Issues

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On Mar 25, we issued an updated research report on Integra LifeSciences Holdings Corporation (IART - Free Report) . The company has been noticing certain major developments overseas. However, a tough competitive landscape is a concern. The stock currently carries a Zacks Rank #2 (Buy).

This New Jersey-based company is a leading developer, manufacturer and marketer of surgical implants and medical instruments for use in neurosurgery, extremity reconstruction, orthopedics and general surgery.

In fourth-quarter 2019, the company registered balanced segmental growth. The Codman Specialty Surgical segment grew 4.1%, while Orthopedics and Tissue Technologies revenues inched up 1.3%. The impressive quarterly performance of DuraGen in Japan, following the third-quarter launch, instills optimism.

During the December-end quarter, revenues from the Codman Specialty Surgical segment climbed 5.6%, organically aided 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.

We are currently upbeat about the longer-term revenue contributions from the Arkis Biosciences and Rebound Therapeutics acquisitions. Expansion of both margins also contributed to the share-price rally.

Meanwhile, softer sales in outpatient settings and the impact of supply constraints in the reported quarter are concerning. The company faces stiff competition in the surgical implants and medical instruments market. It needs continued innovation to deflect rivalry. Moreover, consolidations in the industry might induce an intense pricing pressure.

Also, the worldwide supply disruption and economic stagnation amid the coronavirus outbreak has caused share-price depreciation.Integra has underperformed its industry in the past three months. The stock has lost 33.6% compared with the industry’s 24.5% loss.

Key Picks

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

ResMed has a projected long-term earnings growth rate of 12%. It currently carries a Zacks Rank #2 (Buy). 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 holds a Zacks Rank of 2.

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

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