On Nov 25, we reiterated our Neutral recommendation on
) following its dismal third-quarter 2013 results. Although the
company is facing severe headwinds due to a soft capital spending
environment in the global market, new products are expected to
salvage the company's dwindling top-line growth in the longer
Why the Retention?
CONMED reported third-quarter 2013 adjusted earnings per share of
40 cents, which missed the Zacks Consensus Estimate by a penny
and were lower than the year-ago earnings of 43 cents by 7%. Soft
revenues coupled with the impact of the medical device excise tax
dampened bottom-line growth.
Revenues in the quarter decreased 1.4% to $179.3 million, missing
the Zacks Consensus Estimate of $187 million. The downfall
resulted from weaker sales of capital equipment (down 11.9% year
over year), specifically in the surgical visualization and
powered instrument businesses.
Management reduced its outlook for the rest of the year in
anticipation of a difficult capital spending environment in the
U.S. as well as in other nations. However, based on solid sales
of single-use surgical devices in the first nine months of 2013,
CONMED is confident that surgical procedures will continue to
Revenue guidance has been lowered to the range of $754-$759
million for full-year 2013 from the earlier guided range of
$770-$775 million. Moreover, the forecast for 2013 adjusted
earnings per share has been reduced to $1.75-$1.80 from the prior
guidance of $1.80-$1.85.
Following the release of the quarterly results, the Zacks
Consensus Estimates for 2013 and 2014 declined 2.7% and 6.8% to
$1.77 and $1.91 per share, respectively.
However, new pipeline product launches in early 2014 should boost
sales in the near future. The Altrus product is being considered
as the main growth driver for the company. Further, ongoing
consolidation and restructuring activities will result in
savings. Moreover, we note that the company is also leveraging
investor return through share repurchase and dividend hikes.
Other Stocks to Consider
Investors interested in the medical/dental supply industry may
consider stocks like
Merit Medical Systems, Inc.
). All these stocks carry a Zacks Rank #1 (Strong Buy).
ALIGN TECH INC (ALGN): Free Stock Analysis
CONMED CORP (CNMD): Free Stock Analysis
MCKESSON CORP (MCK): Free Stock Analysis
MERIT MEDICAL (MMSI): Free Stock Analysis
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