Greatbatch (GB) Wins Patent Suit, Gets $35.7M in Damages

Shutterstock photo

Greatbatch Inc. ( GB ) recently won favorable verdict in a patent infringement lawsuit against AVX Corporation and AVX Filters Corporation. A jury in the United States District Court for the District of Delaware found AVX Corp and AVX Filters Corp guilty of infringing two of Greatbatch's patents. Moreover, the jury awarded $35.7 million in damages to the company.

However, the news did not have any positive impact on share price, which fell 1.3% to close at $39.39 on Jan 26, reflecting persistent headwinds. Over the last one year, Greatbatch lost almost 20.2% as compared to S&P 500's negative return of 4.9%.

In the lawsuit filed in Apr 2013, Greatbatch had accused AVX of violating two of its patents by manufacturing and selling filtered feedthrough assemblies used in implantable pacemakers and cardioverter defibrillators.

Meanwhile, Greatbatch's preliminary full-year 2015 results and full-year 2016 outlook failed to impress. The company estimates sales decline of 8% year over year to $1.44 billion in 2015, while sales are estimated to increase modestly to $1.47 billion in 2016.

Greatbatch unveiled better-than-expected EBITDA guidance. Adjusted EBITDA in 2015 is expected to be $312 million, reflecting a year-over-year increase of 1.6%. Adjusted EBITDA margin, on the other hand, is estimated to expand 70 basis points (bps) to 21.6%. For 2016, the company expects adjusted EBITDA at around $327 million while adjusted EBITDA margin is projected at 22.3%.

We believe increasing operating synergies and accretion from the Lake Region buyout will drive margin expansion. The company also expects the acquisition to drive double-digit adjusted earnings growth in 2016. Post that, the Lake Region deal is expected to be even more accretive.

Further, net annual synergy for operating profit is projected at around $25 million in 2016 and is likely to increase to at least $60 million by 2018.

Zacks Rank & Other Key Picks

Greatbatch carries a Zacks Rank #1 (Strong Buy). Exactech EXAC , Staar Surgical STAA and Vascular Solutions VASC are other favorably ranked stocks in the medical sector that have the same Zacks Rank as Greatbatch.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days . Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

EXACTECH INC (EXAC): Free Stock Analysis Report

VASCULAR SOLUTN (VASC): Free Stock Analysis Report

STAAR SURGICAL (STAA): Free Stock Analysis Report

GREATBATCH INC (GB): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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: STAA ,

More from Zacks.com




Equity Research

Research Brokers before you trade

Want to trade FX?