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Here's Why You Should Add Integer Holdings to Your Portfolio

Zacks Equity Research

Integer Holdings Corporation ITGR is well poised for growth on portfolio management, strong presence in the broader MedTech space and improving Non-Medical sales.

The company, with a market capitalization of $1.77 billion, manufactures and develops medical devices and components primarily for original equipment manufacturers (OEMs), which depend on it to design, develop and produce intellectual property protected medical device technologies. Moreover, it has a trailing four-quarter positive earnings surprise of 15.1%, on average.

The stock also has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), are better picks than most.

Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #1.



What’s Favoring the Stock?

Integer Holdings has initiated a new approach to drive sales and profitable growth, following a comprehensive strategic review of the business. The company’s new strategy has two overarching themes that are focused on portfolio management and operational excellence. This will help the company to realize its vision of enhancing patient lives.

Based on consistent efforts to simplify operations, Integer Holdings has been exhibiting profitability since the last couple of quarters and we expect the momentum to continue in the near term.

Management also announced that it has been witnessing revenue growth faster than markets and profits twice the rate of revenue growth.

The company plans to invest more in the areas of Cardio & Vascular, Neuromodulation, and Electrochem to accelerate sales and market penetration. Integer Holdings has also been enhancing profitability in areas of Advanced Surgical, Orthopedics, and Power Solutions through focused sales growth and cost structure initiatives.

Further, the company continues to benefit from strong presence in the broader MedTech space. This, in turn, will drive its overall performance.

Moreover, the company has been exhibiting improvement in Non-Medical sales and witnessed growth in fourth-quarter 2019 primarily on the back of higher military market demand and growth in the energy market. We expect the momentum to sustain in the near term.

Additionally, an upbeat outlook for 2020 and expansion in operating margin instill optimism in the stock.

Notably, for 2020, adjusted earnings are expected in the range of $5.10-$5.30, indicating an improvement of 9-13% from the previous year.

For 2020, Integer Holdings continues to anticipate revenues between $1.29 billion and $1.31 billion. On an adjusted basis, the company expects revenues in the same band, indicating an improvement of 3-4% from the previous year.

Price Performance

Shares of Integer Holdings have lost 29.8% in a year’s time, compared with the industry’s decline of 16.8%. Meanwhile, the S&P 500 Index fell 14.2% in the same timeframe. We expect the stock to rebound based on the aforementioned factors.

Estimates Trend

For 2020, the Zacks Consensus Estimate for revenues is pegged at $1.30 billion, indicating an improvement of 3.3% from the year-ago quarter. The same for earnings stands at $5.20, suggesting growth of 11.1% from the year-ago reported figure.

Other Stocks to Consider

Some other top-ranked stocks from the broader medical space include McKesson Corporation MCK, Merit Medical Systems, Inc. MMSI and The Cooper Companies, Inc. COO, each currently carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

McKesson has an estimated long-term earnings growth rate of 6.1%.

Merit Medical has an estimated long-term earnings growth rate of 12.1%.

Cooper Companies has a projected long-term earnings growth rate of 10.8%.

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McKesson Corporation (MCK) : Free Stock Analysis Report
 
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Integer Holdings Corporation (ITGR) : Free Stock Analysis Report
 
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