Integer Holdings Corporation
ITGR
is well-poised for growth in the coming quarters, backed by its improving non-medical sales. A robust first-quarter 2022 performance, along with its solid foothold in the broader MedTech space, is expected to contribute further. However, dependence on third-party suppliers and stiff competition continue to concern the company.
Over the past year, this Zacks Rank #3 (Hold) stock has lost 11.4% compared with 13.1% fall of the
industry
it belongs to and the S&P 500 composite’s decline of 1.9%.
The renowned medical device outsource manufacturer has a market capitalization of $2.66 billion. The company projects 10.5% growth for 2022 and expects to maintain its strong performance. Integer Holdings’ earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed the same in the other, the average surprise being 4.4%.
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Let’s delve deeper.
Improving Non-Medical Sales:
We are upbeat about Integer Holdings’ improvement in its Non-Medical sales. In the first quarter of 2022, revenues at the Non-Medical Sales segment rose 18.4% year over year, both on a reported and on an organic basis. Sales at the Electrochem product line, a part of the Non-Medical segment, improved 18% on the back of continued recovery of the energy market.
Solid Foothold in the Broader MedTech Space:
We are optimistic about Integer Holdings’ stable footing in the cardiac, neuromodulation, orthopedics, vascular and advanced surgical markets. Its primary customers include large, multi-national original equipment manufacturers and their affiliated subsidiaries.
Integer Holdings has been focusing on its sales efforts when it comes to increasing its market penetration in the Cardio & Vascular, Neuromodulation and Non-Medical Electrochem markets. The company is also taking strategic initiatives to maintain its leadership position in the cardiac rhythm management market.
Strong Q1 Results:
Integer Holdings’ robust first-quarter results raise our optimism. Strong year-over-year top-line performance in the first quarter of 2022 is impressive. Robust segmental performances, along with strength in the majority of its product lines, are encouraging. Continued business recovery despite U.S. labor constraints and global supply-chain disruptions is encouraging. Integer Holdings’ buyout of Aran Biomedical in April raises optimism about the stock.
Downsides
Stiff Competition:
Competition with respect to the manufacturing of Integer Holdings’ medical products across all of its product lines has intensified in recent years and may continue to do so in the future. The market for commercial power sources is competitive, fragmented and subject to rapid technological change. Many other commercial power source suppliers are larger than Integer Holdings and have greater resources, which may help them develop superior, (technologically or otherwise) or more cost-effective products than the latter, thus resulting in lower revenues as well as operating results for Integer Holdings.
Dependence on Third-Party Suppliers:
Integer Holdings’ business depends on a continuous supply of raw materials, which may be susceptible to fluctuations due to transportation issues, government regulations and price controls, among others. Significant increases in the cost of raw materials, which cannot be recovered through increases in the prices of the company’s products, could adversely affect its operating results.
Estimate Trend
Integer Holdings is witnessing a positive estimate revision trend for the current quarter. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 9.3% north to $1.18 per share.
The Zacks Consensus Estimate for the company’s second-quarter 2022 revenues is pegged at $345.2 million, suggesting a 10.6% rise from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are
AMN Healthcare Services, Inc.
AMN
,
Veeva Systems Inc.
VEEV
and
Masimo Corporation
MASI
.
AMN Healthcare, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 1.1%. AMN’s earnings surpassed estimates in all the trailing four quarters, the average beat being 15.6%. You can see
the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has gained 2.9% against the
industry
’s 63.3% fall in the past year.
Veeva Systems has an estimated long-term growth rate of 18.1%. VEEV’s earnings surpassed estimates in the trailing four quarters, the average beat being 9.6%. It currently carries a Zacks Rank #2 (Buy).
Veeva Systems has lost 39.8% compared with the
industry
’s 57.3% fall over the past year.
Masimo, carrying a Zacks Rank #2 at present, has an earnings yield of 3.2% against the industry’s negative yield. MASI’s earnings surpassed estimates in the trailing four quarters, the average beat being 4.4%.
Masimo has lost 32.6% compared with the industry’s 13.1% fall over the past year.
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