3 Reasons to Retain Integer Holdings (ITGR) Stock for Now
Integer Holdings Corporation ITGR is well-poised for growth in the coming quarters, courtesy of its improving non-medical sales. The optimism led by a solid fourth-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 1.4% compared with 15.9% decline of the industry it belongs to and the S&P 500 composite’s fall of 9.4%.
This renowned medical device outsource manufacturer has a market capitalization of $2.54 billion. The company projects 11.6% growth for the next five years and expects to maintain its strong performance. Integer Holdings’ earnings yield of 5.4% is favorable to the industry’s negative yield.
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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 fourth quarter of 2022, revenues at the Non-Medical Sales segment rose 40.9% year over year. The upside was driven by strong sales at the Electrochem product line, part of the Non-Medical segment, across all market segments and incremental sales recovery from the third-quarter supplier delivery issues.
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 to increase its market penetration in the Cardio & Vascular, Neuromodulation and Non-Medical Electrochem markets. The company is also making strategic initiatives to maintain its leadership position in the cardiac rhythm management market.
Strong Q4 Results: Integer Holdings’ robust fourth-quarter results raise our optimism. The company registered strong year-over-year top-line and bottom-line performances. Robust performances by both segments and strength in all three product lines of the Medical Sales segment were also seen. The expansion of both margins bodes well for the stock.
Downsides
Stiff Competition: Competition with respect to the manufacturing of Integer Holdings’ medical products across all 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 and 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 affect its operating results.
Estimate Trend
Integer Holdings is witnessing a negative estimate revision trend for the current quarter. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 3.5% south to $4.13 per share.
The Zacks Consensus Estimate for the company’s first-quarter 2023 revenues is pegged at $351.2 million, suggesting a 12.9% rise from the year-ago quarter’s reported number.
This compares to our first-quarter revenue estimate of $358 million, suggesting a 15.1% improvement from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Hologic, Inc. HOLX, Henry Schein, Inc. HSIC and Avanos Medical, Inc. AVNS.
Hologic, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 15.2%. HOLX’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 30.6%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hologic has gained 3.1% against the industry’s 15.9% decline in the past year.
Henry Schein, sporting a Zacks Rank #1 at present, has an estimated long-term growth rate of 8.1%. HSIC’s earnings surpassed estimates in three of the trailing four quarters and matched the same in the other, the average beat being 2.9%.
Henry Schein has lost 7% compared with the industry’s 5.5% decline over the past year.
Avanos, carrying a Zacks Rank #2 at present, has an estimated growth rate of 1.8% for 2023. AVNS’ earnings surpassed estimates in all the trailing four quarters, the average beat being 11%.
Avanos has lost 11.8% compared with the industry’s 15.9% decline over the past year.
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Hologic, Inc. (HOLX) : Free Stock Analysis Report
Henry Schein, Inc. (HSIC) : Free Stock Analysis Report
Integer Holdings Corporation (ITGR) : Free Stock Analysis Report
AVANOS MEDICAL, INC. (AVNS) : Free Stock Analysis Report
