On June 6, Zacks Investment Research downgraded
Integra Lifesciences Holdings Corporation
) to a Zacks Rank #4 (Sell).
Why the Downgrade?
Integra Lifesciences reported its first-quarter 2014 results on May
1. Adjusted earnings per share of this New Jersey-based
manufacturer and distributor of medical instruments and surgical
implants surged 83.9% year over year to 57 cents in the quarter,
but missed the Zacks Consensus Estimate by a penny.
Revenues for the quarter increased 9.4% year over year to $215.1
million and beat the Zacks Consensus Estimate by a penny. However,
excluding the contribution of revenues from the DuraSeal
acquisition (which closed during the first quarter), contribution
from discontinued products, and the effect of currency exchange
rates, revenues increased by only 3% over the prior year's first
On the basis of product categories, revenues from U.S spine and
Other segment declined 6% to $41.1 million in the first quarter.
This decline is attributable to a 10% decline in the Private label
revenues to $12.9 million. A long-term decline in sales in one of
the company's larger partners and the effect of product line
discontinuations negatively affected the Private label performance.
Integra Lifesciences' overall U.S. Spine business experienced a 7%
downfall in revenues due to the company's poor performance in the
hardware business. Revenues from the U.S. Instruments segment also
dropped 3% from the prior-year quarter, owing to a product line
transfer from U.S. Extremities in the reported quarter.
Discontinued products and lower sales in retractors resulted in
lower reported top-line growth.
In addition, Integra Lifesciences believes the change in accounting
policy for the medical device tax has the potential to reduce
reported net earnings per share by approximately 5 cents in 2014.
Management has lowered its adjusted earnings guidance, primarily
reflecting the negative impact of the change in accounting policy
for the medical device excise tax; greater amortization expense
than the company originally estimated following the purchase price
accounting for the DuraSeal acquisition; and the increase in the
adjusted tax rate.
The Zacks Consensus Estimate for 2014 earnings dropped 4.5% to
$2.94 over the last 60 days. For 2015, majority of the estimates
were revised downward over the same time frame, dragging the Zacks
Consensus Estimate down by 2.4% to $3.32.
Other Stocks to Consider
In the biomedical space,
ANI Pharmaceuticals, Inc.
Gilead Sciences Inc.
) are performing well. All these stocks carry a Zacks Rank #1
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ILLUMINA INC (ILMN): Free Stock Analysis Report
INTEGRA LIFESCI (IART): Free Stock Analysis
GILEAD SCIENCES (GILD): Free Stock Analysis
ANI PHARMACEUT (ANIP): Free Stock Analysis
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