Management of
Greatbatch, Inc.
(
GB
) has updated institutional investors and research analysts
regarding its growth drivers in the core business and development
in its pipeline at the Investor Day conference held on Mar 18. It
also reiterated the guidance for 2013 along with its long-term
growth strategy.
Greatbatch is primarily a producer and supplier of batteries,
capacitors, and components used in implantable medical devices
(IMDs). According to Thomas J. Hook, President & CEO, almost
95% of all active IMDs are developed with Greatbatch's component
products. This is encouraging news for the company as management
believes that it is now capable of producing complete medical
devices for Original Equipment Manufacturer (OEM)
customers.
Moreover, Greatbatch boasts a vast intellectual property (IP)
portfolio of more than 1,000 patents. The IP along with better
sales and marketing initiatives will allow the company to gain
market share in the multi-billion dollar worth cardiac and
neuromodulation, portable medical, vascular and orthopedics
markets. Additionally, the company forged strategic long-term
agreements with its OEM clients to secure healthy revenue
growth.
Management also provided an update on its latest growth
driver, the Algostim - a spinal cord stimulation (SCS) system -
intended to cure chronic pain in the trunk and limbs. The
innovative device has considerable scope to capture a significant
share in the $1.4 billion SCS market. Greatbatch is planning to
apply for Food and Drug Administration (FDA), Pre-Market Approval
(PMA) and CE Mark approval for the device in the second half of
the year. Currently, it is on the lookout for commercialization
partners for the device.
In addition, Greatbatch reiterated its 2013 guidance. It
expects revenues for 2013 in the band of $660-$680 million, up
2%-5% year over year. Adjusted earnings per share are anticipated
between $1.90 and $2.00 for the year, up 7%-13% from 2012.
The current Zacks Consensus Estimates for revenues and
earnings per share for full year 2013 are $675 million and $1.97,
respectively.
Our Take
We are encouraged by Greatbatch's effort to transform into a
full-fledged medical devices company. Its top customers include
leading players such as
Medtronic
(
MDT
) and
St. Jude Medical
(
STJ
). The company's pipeline and recent acquisitions should propel
growth going forward.
However, issues in the Orthopedic business, a soft CRM market
and pricing pressure remain headwinds for the company. Further,
Greatbatch needs to enhance its operational efficiency to boost
bottom line growth following the shut down of its Swiss
facilities.
Greatbatch, Inc. currently retains a Zacks Rank #3 (Hold).
While we remain on the sidelines for Greatbatch, semi-discretes
company -
Cree, Inc.
(
CREE
) with a Zacks Rank #2 (Buy) warrants a look.
CREE INC (CREE): Free Stock Analysis Report
GREATBATCH INC (GB): Free Stock Analysis
Report
MEDTRONIC (MDT): Free Stock Analysis Report
ST JUDE MEDICAL (STJ): Free Stock Analysis
Report
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