Here’s why you should keep Integra (IART) stock for now
August 27, 2021
5 minutes to read
This story originally appeared on Zacks
Holding company Integra LifeSciences IART is well positioned for growth in the coming quarters, supported by the strength of the Codman Specialty Surgical (“CSS”) and Tissue Technologies businesses. The company reported better-than-expected results for the second quarter of 2021. A strong sequential performance in the second quarter gives cause for optimism. However, currency issues and stiff competition persist.
Over the past year, Zacks Rank # 3 (Hold) stock has gained 50.5% vs. 14.1% industry growth and a 29.5% rise in the S&P 500.
The renowned medical device company has a market capitalization of $ 6.10 billion. Its second quarter 2021 profits were 17.9% higher than Zacks’ consensus estimate.
Over the past five years, the company has seen earnings growth of 8.9% compared to the industry’s 2.6% rise and the S&P 500’s 2.8% increase. The company’s long-term projection of 14.8% compares to the industry’s projection for growth of 18.1% and S&P 500 expectations of 11.3%.
Image source: Zacks Investment Research
Let’s dig deeper.
Benefits of the 2nd trimester: Integra ended the second quarter of 2021 with better than expected earnings and revenue. Year-over-year revenue growth through strong performance in the CSS and Tissue Technologies segments encourages optimism. Strong sequential growth in the second quarter was driven by the recovery of the company’s core product portfolio in neurosurgery, instruments, burns and surgical reconstruction.
The international performance was strongest in the Asia-Pacific region, led by Japan and China. An increase in gross profit and the expansion of both margins are other advantages. The financial forecasts noted indicate that this growth dynamic will continue.
CSS offers solid perspectives: CSS segment revenue grew 51.3% year-over-year in the second quarter of 2021, driven by double-digit organic growth in neurosurgery and global instruments. The CSS segment also saw double-digit growth in international sales in all regions compared to the previous year.
We are optimistic that Integra will acquire ACell, Inc. in 2021. Despite a slower start in the second quarter, this is expected to reach annual revenue of $ 70 million to $ 74 million per branch. All critical components related to the ACell integration were completed ahead of schedule in the second quarter.
Tissue technologies have potential: We are optimistic about Integra’s Tissue Technologies business, which grew 49.8% year-on-year on a reported basis and 47.1% organically in the second quarter. In the quarter, wound reconstruction sales improved 52% on an organic basis compared to the prior year. Wound reconstruction sales improved on average, leveraging Integra Skin and SurgiMend in the company’s burn, trauma and surgical reconstruction markets.
Competitive landscape: Integra faces significant competition in the specialty surgical solutions space from the Aesculap division of B. Braun Medical, Inc., Johnson & Johnson and other MedTech bigwigs. The company competes with other major players in orthopedics and tissue technologies, including Wright Medical Group, NV and Stryker Corporation. Integra must constantly innovate on the product front in order to keep up with the competition.
Postponement of the sale of surgical products linked to COVID-19: Integra management noted that in the first two months of the fourth quarter of 2020, sales were in line with expectations. However, since March, as the pandemic took a more severe form, demand for the company’s surgeries has declined dramatically. The emergence of a new, more contagious strain of virus could disrupt activity across the board.
Currency problems persist: Integra is sensitive to currency fluctuations as it generates significant income outside of the United States. Therefore, exchange fluctuations between the US dollar and foreign currencies can impact the demand for the company’s products in foreign countries. With the recent upward trend observed in the value of the US dollar, a further acceleration expected by analysts of this value will hurt the company’s revenues abroad.
Estimate the trend
Integra has witnessed a positive estimate revision trend for 2021. Over the past 90 days, Zacks’ consensus estimate for its earnings rose 3.4% northward to $ 3.02 .
Zacks’ consensus estimate for Q3 2021 revenue is set at $ 385.98 million, which suggests a 4.25% increase from the figure released a year ago.
Choice of keys
Some top ranked stocks in the Medical Devices industry are Intuitive Surgical, Inc. ISRG, Semler Scientifique inc. SMLR and IDEXX Laboratories, Inc. IDXX, each currently wearing a Zacks Rank # 2 (Buy). You can see The full list of today’s Zacks # 1 Rank (Strong Buy) stocks here.
Intuitive Surgical has a long-term profit growth rate of 9.7%.
Semler Scientific has a long-term profit growth rate of 25%.
IDEXX has a long-term earnings growth rate of 19.9%.
5 actions in the process of doubling
Each was selected by a Zacks expert as the # 1 favorite stock to earn + 100% or more in 2021. Previous recommendations climbed + 143.0%, + 175.9%, + 498.3% and + 673.0%.
Most of the stock in this report is flying under Wall Street’s radar, which provides a great opportunity to get into the ground floor.
Today, discover these 5 potential circuits >>
Want the latest recommendations from Zacks Investment Research? Today you can download 7 best stocks for the next 30 days. Click to get this free report
Intuitive Surgical, Inc. (ISRG): Free Inventory Analysis Report
Integra LifeSciences Holdings Corporation (IART): Free Stock Analysis Report
IDEXX Laboratories, Inc. (IDXX): Free Inventory Analysis Report
Semler Scientific Inc. (SMLR): Free Stock Analysis Report
To read this article on Zacks.com, click here.
Zacks investment research