On Jun 26, 2014, Zacks Investment Research downgraded
Integra Lifesciences Holdings Corporation
) to a Zacks Rank #4 (Sell).
Why the Downgrade?
Integra Lifescienceshas witnessed downward estimate revisions
for 2014 and 2015 following tepid first-quarter performance with
earnings missing and revenues marginally beating the Zacks
Although adjusted earnings per share of this NJ-based
manufacturer and distributor of medical instruments and surgical
implants surged 83.9% year over year in the quarter, it missed the
Zacks Consensus Estimate by a penny.
Revenues for the quarter increased 9.4% year over year,
marginally beating the Zacks Consensus Estimate. However, excluding
the revenues from the DuraSeal acquisition (which closed during the
first quarter) and from discontinued products, and the effect of
currency exchange rates, revenues increased by a mere 3%.
We are concerned about the company's U.S. Spine business which
experienced a massive 7% fall in revenues due to the company's
dismal performance in the hardware business. Also, revenues from
the U.S. Instruments segment dropped 3% from the prior-year
quarter, owing to a product line transfer from U.S. Extremities in
the quarter. Product terminations and lower retractor sales
affected top-line growth.
Over the past several quarters, Integra Lifesciences has been
witnessing weak revenues across its U.S. Spine and Others segments
owing to continued pricing pressure and challenging market
conditions. Although the company is leaving no stone unturned to
consolidate its operations, the near-term outlook is bleak.Further,
Integra faces competition from several larger players in both the
neurosurgery and orthopedics markets.
In addition, Integra Lifesciences believes that the change in
accounting policy for the medical device tax has the potential to
dent net earnings per share by approximately 5 cents in 2014. The
bearish 2014 outlook also fails to indicate any near-term catalyst
that may improve the economic scenario in the near future.
The Zacks Consensus Estimate for 2014 is down 4.9% to $2.94 per
share over the last 60 days as all the 13 analysts covering the
stock lowered their estimates. The same for 2015 fell 2.4% to $3.32
per share as 11 out of 12 estimates were lowered over the same time
frame without any upside movement.
Other Stocks to Consider
While Integra Lifesciences' Zacks Rank does not call for
investor attention, some better-ranked stocks in the similar
ANI Pharmaceuticals, Inc.
Biogen Idec Inc.
). All the three stocks sport a Zacks Rank #1 (Strong Buy).
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INTEGRA LIFESCI (IART): Free Stock Analysis
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