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3 Reasons to Retain CONMED (CNMD) Stock in Your Portfolio

CONMED Corporation CNMD is well-poised for growth in the coming quarters, courtesy of its broad product spectrum. A robust second-quarter 2022 performance, along with a few recent buyouts, is expected to contribute further. Stiff competition and regulatory requirements persist.

Over the past year, the Zacks Rank #3 (Hold) stock has lost 40.9% compared with 19.3% decline of the industry and 17.4% fall of the S&P 500.

The renowned global medical products manufacturer specializing in surgical instruments and devices has a market capitalization of $2.37 billion. The company projects 11.2% growth for the next five years and expects to maintain its strong performance. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and matched the same in the other, the average surprise being 4.7%.

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Zacks Investment Research


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Let’s delve deeper.

Recent Buyouts: CONMED’s recent acquisitions raise our optimism. The company, in August, completed its previously-announced acquisition of privately-held Biorez, Inc. Per the management, the addition of Biorez and its proprietary BioBrace platform is expected to strengthen its sports medicine portfolio.

In June, CONMED completed its previously-announced acquisition of privately-held In2Bones Global Inc., which will likely boost its Orthopedic portfolio.

Broad Product Spectrum: CONMED offers a broad line of surgical products, which includes several new devices in the Orthopedic, Laparoscopic, Robotic, Open Surgery, Gastroenterology, Pulmonary and Cardiology sections. Products like Hi-Fi Tape and Hi-Fi suture interface represent a critical component of repair security in the rotator cuff repair space.

Other notable offerings include the MicroFree platform in Orthopedics, the TruShot, the Y-Knot Pro and the CRYSTALVIEW Pump. The Anchor Tissue Retrieval bag is a unique product under the General Surgery arm.

Strong Q2 Results: CONMED’s solid second-quarter 2022 results buoy optimism. The company witnessed strong segmental performances across its Orthopedic and General Surgery units. It saw sales growth in domestic and overseas markets. The expansion of both gross and operating margins bodes well for the stock.

Downsides

Regulatory Requirements: Almost all of CONMED’s products are classified as class II medical devices subject to regulations of numerous agencies and legislative bodies, including the FDA and its international counterparts. As a medical device manufacturer, the company’s manufacturing processes and facilities are subject to on-site inspection and continuing review by the FDA for compliance with the Quality System Regulations. CONMED may have future inspections at its sites and there can be no assurance that the costs of responding to such inspections will not be material.

Stiff Competition: The market for CONMED’s products is highly competitive and its customers have numerous alternatives of supply. Many of the company’s competitors offer a range of products in areas other than those in which it competes, making such competitors more attractive to surgeons, hospitals, group-purchasing organizations and others.

Estimate Trend

CONMED is witnessing a negative estimate revision trend for 2022. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 5.7% south to $3.32.

The Zacks Consensus Estimate for the company’s third-quarter 2022 revenues is pegged at $282.2 million, suggesting a 13.4% improvement 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, ShockWave Medical, Inc. SWAV and McKesson Corporation MCK.

AMN Healthcare, flaunting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 3.2%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 15.7%.

You can see the complete list of today’s Zacks #1 Rank stocks here.

AMN Healthcare has lost 9.4% compared with the industry’s 39.9% fall in the past year.

ShockWave Medical, sporting a Zacks Rank #1 at present, has an estimated growth rate of 33.1% for 2023. SWAV’s earnings surpassed estimates in all the trailing four quarters, the average beat being 180.1%.

ShockWave Medical has gained 27% against the industry’s 35.8% fall over the past year.

McKesson, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 10.1%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 13%.

McKesson has gained 66.2% against the industry’s 19.3% fall over the past year.


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