) unveiled long-term growth plans during its annual investor and
analyst day. The company also provided preliminary financial
outlook for 2013.
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Teleflex reiterated its guidance for 2012. Revenues are expected
to grow in the range of 6% to 7% in constant currency. The
company envisages adjusted diluted earnings per share from
continuing operations in the band of $4.35 and $4.40 for 2012.
The current Zacks Consensus Estimate of $4.39 for 2012 is within
the Teleflex guidance range.
The global leader in medical devices used in critical care and
surgery also provided preliminary guidance for 2013. Annual sales
growth is forecast in the range of 11% to 13% for 2013, including
the accretion from its recent LMA buyout. Foreign exchange
headwinds are expected to hurt sales growth by 1% in 2013.
The company envisages adjusted earnings per share in the band of
$4.70 and $4.90 for 2013, implying annual growth in the range of
7% to 13%. The current Zacks Consensus Estimate of $4.85 for 2013
is within the Teleflex guidance range.
Moreover, gross margin is expected in the range of 50% to 51% in
2013. Adjusted operating margin is expected in the range of 16%
to 17% (after accounting for the 1% negative impact from medical
Firstly, Teleflex continues to build a strong operating platform
to support future growth. Its effort to expand foothold in
higher-growth markets like China and Brazil coupled with a
portfolio geared to meet the needs of non-elective procedures is
likely to accelerate its growth in the future.
Secondly, the company envisages sales growth to surpass the
market growth rate. It also plans to gain market share in key
product areas. Product innovation is the driving force for
Teleflex. Contributions from newer products in the most recent
quarter reflect gains from the company's increased focus on
research and development. Moreover, portfolio expansion via
inorganic route has historically bolstered Teleflex's financial
Thirdly, Teleflex continues to expand its margins. It expects to
achieve gross margin in the ballpark of 57% while operating
margin is envisaged around 25% in the long-term. The company aims
to achieve its goal of margin expansion on the back of lower
costs and reduction in operational footprint.
Improvement in pricing environment is another upside to achieve
margin expansion. The company has been progressively raising
prices for its offerings. In the third quarter, Teleflex
witnessed a 200 basis point expansion in pricing in the Asian
Teleflex's aggressive portfolio extension has been the crux of
the company's growth profile. Meanwhile, the recent divestiture
of its OEM Orthopedic division will allow Teleflex to leap on the
growth trajectory as it is expected to aid the company strategy
of new product introduction, and investment in innovative
technologies. Moreover, demographic trends and barriers to entry
in the industry should bolster organic growth rates at Teleflex.
), which operate in similar business segments, present a tough
competitive landscape for Teleflex. Another factor weighing on
the company is that demand for its products is susceptible to
healthcare reimbursement systems in the domestic as well as
We currently have a long-term 'Neutral' recommendation on the
stock which carries a short-term Zacks #2 Rank (Buy).