A month has gone by since the last earnings report for Integra LifeSciences (IART). Shares have lost about 2.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Integra due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Integra LifeSciences reported adjusted earnings per share (EPS) of 60 cents in the second quarter of 2018, up 33.3% from the year-ago figure. Adjusted EPS remained in line with the Zacks Consensus Estimate.
Total revenues in the reported quarter increased 29.8% year over year to $366.2 million, lagging the Zacks Consensus Estimate of $368 million. Excluding revenues from Codman acquisitions, divestitures and the effect of currency exchange rates, organic revenues rose 3.4% year over year.
Apart from high organic revenues, successful progress with the company's Codman integration and a continued progress with the channel expansion strategy within Orthopedics and Tissue Technologies strongly contributed to the company's second-quarter performance.
Coming to product categories, revenues from the company's Codman Specialty Surgical segment surged 49.8% to $239.5 million. Growth came primarily on the back of stronger than expected sales in Advanced Energy franchise.
Orthopedics and Tissue Technologies revenues came in at $126.7 million in the second quarter, up 3.6% year over year. This upside is fueled by 6% organic growth excluding the private label business.
Gross margin contracted 248 basis points (bps) to 62.4% in the reported quarter despite a 24.8% rise in gross profit to $228.6 million. Selling, general and administrative expenses increased 21.8% to $176.6 million in the quarter under review while research and development expenses rose 21.3% to $19.1 million. However, adjusted operating margin saw a 105-bps expansion to 8.9% in the second quarter.
Integra LifeSciences exited second-quarter 2018 with cash and cash equivalents of $183.8 million, down from $189.4 million recorded at the end of the first quarter. Net cash flow from operating activities at the end of the second quarter was $77.7 million, up from $57.7 million in the year-ago period.
The company has raised the lower end of its full-year revenue guidance by $5 million to a new range of $1.475-$1.49 billion. The Zacks Consensus Estimate for 2018 revenues of $1.49 billion coincides with the upper end of the guided range. However, the company reiterates its full-year outlook for organic sales of approximately 5.0%.
Adjusted earnings per share for 2018 have been tapered to $2.36-$2.42 from the previous projection of $2.34-$2.42. The Zacks Consensus Estimate for 2018 adjusted earnings is pegged at $2.41, lower than the company's guided range.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
Currently, Integra has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value, growth, and momentum investors.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Integra has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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