On Jul 3, 2014, we initiated coverage on
Integra LifeSciences Holdings Corpopration
), a forerunner in regenerative medicine. Over the past several
quarters, Integra has been witnessing weak revenues across its U.S.
Spine and Others segment owing to continued pricing pressure and
challenging market conditions. However, we are currently impressed
with the strong momentum of its new and improved Neurosurgery
product line post the acquisition of DuraSeal products from
), and expect this to boost growth in the coming period.
In the first quarter of 2014, Integra LifeSciences reported
adjusted earnings per share of 57 cents, up a significant 83.8% but
short of the Zacks Consensus Estimate by a penny. Total revenue
increased 9.4% year over year beating the Zacks Consensus Estimate
by a whisker. However, excluding DuraSeal revenues and certain
other discontinued operations, the top line increased a mere
In addition, the bearish 2014 earnings outlook also fails to
indicate any near-term catalyst that may improve the economic
scenario in the near future. Although the company expects to see an
improvement in the outlook for Spine Hardware with the introduction
of new distributors and recently launched products, near-term
visibility is still a matter of concern.
However, we are upbeat about the company's acquisition of the
DuraSeal product lines from Covidien. According to Integra, the
DuraSeal product line is a strategic fit for its Neurosurgery
division and will add to its growth and profitability in 2014. In
addition to its strategic value, DuraSeal will add scale and
increase profitability without further complicating the company's
structure. The reported quarter, being the first quarter
post-closure of the DuraSeal acquisition, contributed a decent
share to the company's neurosurgery business.
Integra currently carries a Zacks Rank #4 (Sell).
Other Stocks to Consider
However, investors interested in the sector can consider stocks
Biogen Idec Inc.
). Both the stocks sport a Zacks Rank #1 (Strong Buy).
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