Yahoo Finance Here's Why You Should Retain CONMED (CNMD) Stock for Now
CONMED Corporation CNMD is well poised for growth in the coming quarters, courtesy of its broad product spectrum. The optimism, led by the solid first-quarter 2024 performance and a potential General Surgery, is expected to contribute further. However, headwinds from supply-chain constraints and data security threats persist.
This Zacks Rank #3 (Hold) company’s shares have lost 38.4% year to date against the industry’s 1.5% growth. The S&P 500 Index has increased 15.1% in the same time frame.
CONMED, the renowned global medical products manufacturer specializing in surgical instruments and devices, has a market capitalization of $2.06 billion. The company projects 24.4% growth over the next five years and expects to maintain its strong performance going forward.
Its earnings surpassed estimates in three of the trailing four quarters and missed the same once, delivering an average surprise of 3.94%.
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Let’s delve deeper.
Potential in General Surgery: The segment consists of a complete line of endo-mechanical instrumentation for minimally invasive laparoscopic and gastrointestinal procedures, a line of cardiac monitoring products, as well as electrosurgical generators and related instruments.
CONMED’s unique products and solutions within the General Surgery segment have been providing a competitive edge in the MedTech space. One of these products, the Anchor Tissue Retrieval bag, deserves a special mention. It is one of the major platforms in the company’s specimen bag portfolio.
Broad Product Spectrum: CONMED offers a broad line of surgical products, including several new devices in the Orthopedic, Laparoscopic, Robotic, Open Surgery, Gastroenterology, Pulmonary and Cardiology sections.
Products like the Hi-Fi Tape and the Hi-Fi suture interface are critical components of repair security in the rotator cuff repair space. During the fourth quarter, CNMD remained focused on the introduction of a delivery system for MIS rotator cuff repair.
Other notable offerings were the MicroFree platform in Orthopedics, the TruShot, the Y-Knot Pro and the CRYSTALVIEW Pump. The Anchor Tissue Retrieval bag is a unique product under the General Surgery arm.
Solid Recurring Revenue Base: Approximately 80% of CONMED’s revenues are recurring, derived from the sale of disposable single-use products. The remaining 20% comes from the sale of capital equipment (such as powered drills and saws for surgery, electrosurgical generators, video-imaging cameras, fluid control systems and surgical hand-pieces). This, in turn, creates demand for complementary single-use items.
Hospitals and clinics are expanding the use of single-use, disposable products. This endeavor is aimed at reducing expenses related to sterilizing surgical instruments and products following surgery.
CONMED’s revenues totaled $312.3 million in the first quarter of 2024, up 5.7% year over year.
Downsides
Regulatory Requirements: Substantially, all CONMED products are classified as class II medical devices, subject to regulations from numerous agencies and legislative bodies worldwide. As a manufacturer of medical devices, the company’s manufacturing processes and facilities are subject to on-site inspection and constant review by the FDA for compliance with the Quality System Regulations.
Supply Constraints: Although CONMED recorded strong growth across all segments in the fourth quarter, the legacy orthopedic business was hurt by supply-chain constraints. The supply disruption continued to pose a headwind for the company during the first quarter of 2024.
CNMD expects supply-chain issues to improve going forward in 2024. Moreover, revenues were hurt 0.2% by unfavorable currency movement during the first quarter.
Estimate Trend
CONMED is witnessing a stable estimate revision trend for 2024. In the past 30 days, the Zacks Consensus Estimate for earnings remained unchanged at $4.30 per share.
The same for the company’s second-quarter revenues is pegged at $334.6 million, indicating a 5.3% improvement from the year-ago quarter’s reported number. The bottom-line estimate for the second quarter is expected to improve 10.8% from the year-ago period’s level of 83 cents.
CONMED Corporation Price
CONMED Corporation price | CONMED Corporation Quote
Stocks to Consider
Some better-ranked stocks in the broader medical space are DaVita Inc. DVA, ResMed RMD and Hologic HOLX.
DaVita, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 13.6%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 29.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DaVita’s shares have risen 36.4% compared with the industry’s 9.3% growth year to date.
ResMed, carrying a Zacks Rank of 2 at present, has an estimated earnings growth rate of 13.2% in 2024. Its earnings surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 2.81%.
RMD’s shares have risen 6.9% year to date compared with the industry’s 2.8% growth.
Hologic, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 7.4%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 4.94%.
Hologic’s shares have risen 0.3% year to date compared with the industry’s 4.7% growth.
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CONMED Corporation (CNMD) : Free Stock Analysis Report
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