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Here's Why You Should Retain Integer Holdings Stock for Now

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. However, stiff competition remains a concern.

Shares of Integer Holdings have gained 6.1%, compared with the industry’s rise of 1.3% on a year-to-date basis. Meanwhile, the S&P 500 Index grew 3.2% in the same timeframe.

Integer Holdings, with a market capitalization of $2.79 billion, manufactures and develops medical devices and components primarily for original equipment manufacturers (OEMs), which depend on the company to design, develop and produce intellectual property protected medical device technologies. Moreover, it has surpassed the Zacks Consensus Estimate in the trailing four quarters by 16.8%, on average.

Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #3 (Hold).




What’s Deterring the Stock?

Integer Holdings generates majority of revenues from cardiac, neuromodulation, orthopedics, vascular, advanced surgical and power solutions markets. The company faces intense competition in those areas from players like Medtronic plc MDT, Boston Scientific Corporation BSX, Stryker, Smith & Nephew and ConvaTec.

What’s Favoring the Stock?

Integer Holdings has introduced 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 in realizing its vision of enhancing patient lives.

On the basis of consistent efforts to simplify operations, Integer Holdings has been witnessing profitability since the last couple of quarters and we expect the momentum to sustain in the near term.

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

Further, the company continues to gain from strong presence in the broader MedTech space. This, in turn, will help in accelerating the company’s overall performance.

Moreover, the company has been exhibiting improvement in Non-Medical sales and anticipates it to improve in fourth-quarter 2019 primarily on the back of increased military and environmental demand despite the weakness in the energy market.

Additionally, an upbeat outlook for 2019 and expansion in operating margin instill optimism in the stock.

Notably, for 2019, adjusted earnings are expected in the range of $4.55-$4.65 (up from the previously guided range of $4.25-$4.45 per share), indicating an improvement of 20-22% from the previous year.

For 2019, Integer Holdings continues to anticipate revenues between $1.27 billion and $1.28 billion. On an adjusted basis, the company expects revenues in the same band, indicating an improvement of 4-5.5% from the prior year.

For fourth-quarter 2019, the company projects adjusted earnings per share in the range of $1.13-$1.23, suggesting growth of 9-18% from the prior-year quarter. Further, revenues are estimated to range between $333 million and $348 million for the same timeframe, indicating an improvement of 10-15% from the year-ago quarter.

Which Way are Estimates Headed?

For 2020, the Zacks Consensus Estimate for revenues is pegged at $1.29 billion, indicating growth of 3.3% from the prior-year quarter. The same for earnings stands at $4.96, suggesting an improvement of 7.8% from the year-ago reported figure.

Stock to Consider

A better-ranked stock in the broader medical space is AMN Healthcare Services, Inc. AMN. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AMN Healthcare’s long-term earnings growth rate is estimated at 12.5%.

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Medtronic PLC (MDT) : Free Stock Analysis Report
 
Boston Scientific Corporation (BSX) : Free Stock Analysis Report
 
AMN Healthcare Services Inc (AMN) : Free Stock Analysis Report
 
Integer Holdings Corporation (ITGR) : Free Stock Analysis Report
 
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