It has been about a month since the last earnings report for Integra LifeSciences Holdings CorporationIART . Shares have added about 8.5% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is IART due for a pullback? 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 drivers.
Integra LifeSciences reported adjusted earnings per share (EPS) of 58 cents in the first quarter of 2018, up 48.7% from the year-ago figure. Adjusted EPS surpassed the Zacks Consensus Estimate by 18.4%.
Total revenues in the reported quarter increased 38.1% year over year to $357.1 million, which surpassed the Zacks Consensus Estimate of $350 million. Excluding revenues from acquisitions, divestitures and the effect of currency exchange rates, organic revenues rose 3% year over year, slightly higher than the company's expectations.
The growth in revenues was primarily driven by high organic revenues, successful progress with the company's Codman integration and continued progress with the channel expansion strategy within Orthopedics and Tissue Technologies.
Coming to product categories, revenues from the company's Codman Specialty Surgical segment surged 51.1% to $236.1 million. Growth came on the back of strong acquired revenues from Codman Neurosurgery and strong capital sales of CUSA Clarity.
Orthopedics and Tissue Technologies revenues came in at $120.9 million in the first quarter, up 18.2% year over year fueled by one full quarter of sales from Derma Sciences and strength in both regenerative technologies as well as ankle and shoulder portfolios.
Gross margin contracted 691 basis points (bps) to 59.6% in the reported quarter despite a 23.7% rise in gross profit. Selling, general and administrative expenses increased 14.8% to $163.6 million in the reported quarter, while research and development expenses rose 18.3% to $18.3 million. However, adjusted operating margin saw a 324-bps expansion to 8.7% in the first quarter.
Integra LifeSciences exited first-quarter 2018 with cash and cash equivalents of $189.4 million, up from $174.9 million recorded at the end of 2017. Net cash flow from operating activities at the end of the first quarter was $41.5 million, up from $28.9 million in the year-ago period.
The company now has raised full-year 2018 revenue guidance from the earlier projected range of $1.46-$1.48 billion, to a range of $1.47-$1.49 billion on the back of strong performance of the Codman Specialty Surgical segment more favorable foreign currency rates. The Zacks Consensus Estimate for full-year 2018 revenues of $1.48 billion remains within the guided range. However, the full-year 2018 guidance for organic sales of approximately 5.0%, has been reiterated.
Adjusted earnings per share for 2018 has been raised to a new range of $2.34 to $2.42 from the previously provided guidance of $2.25-$2.35. The Zacks Consensus Estimate for 2018 adjusted earnings is pegged at $2.33, 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. There have been eight revisions higher for the current quarter.
Integra LifeSciences Holdings Corporation Price and Consensus
Integra LifeSciences Holdings Corporation Price and Consensus | Integra LifeSciences Holdings Corporation Quote
At this time, IART has a nice Growth Score of B and a grade with the same score on the momentum front. 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 B. 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 growth and momentum investors while value investors may want to look elsewhere.
Estimates have been trending upward for the stock and the magnitude of these revisions looks promising. It comes with little surprise IART has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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