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Greatbatch (GB) Lifts Q1 and FY16 Guidance, Shares Rally


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Shares of Greatbatch Inc. GB surged 5.3% to close at $36.64 on Mar 8, after the company updated its first-quarter and full-year 2016 guidance.

Greatbatch now expects sales in the range of $1.425-$1.475 billion for full-year 2016, compared to its prior guidance of approximately $1.47 billion at constant currency (cc). At cc, first-quarter sales are forecasted at around $335 million.

For full-year 2016, adjusted EBITDA is projected in the range of $320 million to $335 million as compared to its previous outlook of approximately $327 million. Adjusted earnings are expected in the range of $3.00 to $3.35 per share.

The updated guidance reflects Greatbatch's growing confidence on its operations post the Nuvectra spin-off and the completion of the Lake Region Medical buyout. The better-than-expected fourth-quarter 2015 results also encouraged the company to issue the strong guidance.

Greatbatch reported adjusted earnings of 92 cents per share in the fourth quarter of 2015, which crushed the Zacks Consensus Estimate by 11 cents and increased 19.5% from the year-ago quarter. Sales, including two months of operations from Lake Region Medical ($138.6 million), surged 87.1% year over year to $317.6 million.

Apart from sales and earnings, Greatbatch provided its estimates for certain items that affect cash flow. Maintenance Capital Expenditures are forecasted in the band of $50-$60 million for full-year 2016.

Depreciation & Amortization is expected at around $100-$105 million, while stock compensation expenses are likely to be about $14 million for the full year. Working Capital is expected to remain unchanged as compared to full-year 2015 levels.

Further, other operating expenses are forecasted in the band of $55-$65 million for the full year. Cash payment for the Nuvectra Spin-off is likely to be $75 million.

We believe that the synergies from the Lake Region Medical acquisition will help Greatbatch meet its growth target in 2016. The company expects to achieve annual savings of $25 million this year and long-term synergies of at least $60 million over the next three years. Moreover, optimization of manufacturing facilities and consolidation of supplier base will drive profits over the long haul.

Zacks Rank & Key Picks

Currently, Greatbatch carries a Zacks Rank #5 (Strong Sell).

Better-ranked stocks in the industry include Abiomed ABMD , CryoLife CRY and Edwards Lifesciences EW . All the three stocks sport a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Business , Investing , Stocks
Referenced Symbols: ABMD , EW , CRY ,



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