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Why Is Conmed (CNMD) Up 4.3% Since Last Earnings Report?

Zacks Equity Research

It has been about a month since the last earnings report for Conmed (CNMD). Shares have added about 4.3% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Conmed due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

CONMED Q4 Earnings Match Estimates on Strength in Orthopedic Surgery

CONMED Corporationposted fourth-quarter 2018 adjusted earnings per share of 73 cents, in line with the Zacks Consensus Estimate. Also, the figure improved 5.8% from the year-ago quarter.

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The New York-based medical products manufacturer posted revenues of $242.4 million, up 8.9% on a year-over-year basis and 10.8% at constant currency (cc). Notably, the figure surpassed the Zacks Consensus Estimate of $229.2 million.

2018 Results at a Glance

CONMED reported full-year adjusted earnings per share of $2.18, edging past the Zacks Consensus Estimate by a penny. Earnings grew 15.3% from the year-ago figure.

On a full-year basis, CONMED reported revenues worth $859.6 million, which also outpaced the Zacks Consensus Estimate of $846.4 million. Revenues also climbed 7.9% year over year and 8.4% at cc.

Orthopedic Surgery sales totaled $446.7 million (52% of net revenues) while General Surgery sales grossed $412.9 million (48%).

Segment Details

Orthopedic Surgery

Revenues in the segment totaled $124.8 million, up 3.1% from the year-ago quarter.

Domestically, Orthopedics revenues increased 5.2% from the prior-year quarter's level, while international sales increased 1.9%. Per management, growth was driven by strong performance bythe product portfolio.

General Surgery

Revenues in the segment totaled $117.6 million, up 15.7% year over year.

Domestically, General Surgery sales improved 14.2% year over year and international sales increased 19.1%.

Sales by Geography

In the reported quarter, sales in the United States grossed $125.2 million, up 10.5% year over year. International sales climbed 7.2% to $117.2 million.

Margins

Gross profit in the quarter totaled $132.7 million, up 7% year over year. Gross margin was 54.7%, contracting 100 basis points (bps).

Adjusted operating income came in at $106.8 million, up 6% year over year. Adjusted operating margin was 44.1%, down 120 bps year over year.

Financial Condition

Cash flow from operations for the year was $74.7 million compared with $65.6 million in 2017. Long-term debt by the end of 2018 was $438.6 million.

2019 Guidance

CONMED expects 2019 sales growth in the range of 5-6% at cc.

The company forecasts 2019 adjusted diluted net earnings per share in the range of $2.42 to $2.47.This represents growth of 11-13% over 2018. Notably, the Zacks Consensus Estimate is pegged at $2.41, within the guided range.

The guidance excludes any potential impact from the pending acquisition of Buffalo Filter, which is expected to close in the first quarter of 2019.

How Have Estimates Been Moving Since Then?

Fresh estimates followed an upward path over the past two months. The consensus estimate has shifted 7.33% due to these changes.

VGM Scores

At this time, Conmed has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Conmed has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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