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Conmed (CNMD) Down 4.4% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Conmed (CNMD). Shares have lost about 4.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Conmed due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

CONMED's Q2 Earnings Surpass Estimates, '21 View Up

CONMED delivered adjusted earnings per share of 71 cents in the second quarter of 2021 against the year-ago loss of 7 cents. The figure surpassed the Zacks Consensus Estimate by 14.5%.

GAAP earnings per share for the quarter was 41 cents a share against the year-earlier loss of 96 cents.

Revenues in Detail

CONMED registered revenues of $255.2 million in the second quarter, up 61.7% year over year. The figure surpassed the Zacks Consensus Estimate by 2.9%.

At CER, revenues improved 58.2%.

Robust segmental performances significantly drove the company’s second-quarter top line.

Segment Details

Revenues at the Orthopedic Surgery segment totaled $107.9 million, up 78.4% from the year-ago quarter on a reported basis. At CER, the revenue uptick was 72.9%.

On the domestic and international front, Orthopedics revenues rose 90.7% and 71.7% on a reported basis (up 63.1% at CER), respectively, from the prior-year levels.

The global Orthopedics arm continued to register improvement in procedures in both the international direct markets and the domestic business.

Revenues at the General Surgery segment amounted to $147.3 million, up 51.4% year over year on a reported basis and 49.1% at CER.

Domestically, General Surgery sales rose 55.7% year over year, while international sales rose 42.2% on a reported basis (up 35.2% at CER).

The global General Surgery business was significantly driven by continued strength in the company’s AirSeal and Buffalo Filter.

Sales by Geography

In the reported quarter, sales in the United States amounted to $143.6 million, up 64.2% year over year. International sales were $111.6 million, up by 58.6% and 50.7% year-over-year on a reported basis and at CER, respectively.

Margins

In the quarter under review, CONMED’s gross profit rose 96.6% to $141.4 million. Gross margin expanded by a huge 984 basis points (bps) to 55.4%.

Selling & administrative expenses rose 23.6% to $104.4 million. Research and development expenses went up 30.1% year over year to $11.3 million. Total operating expenses of $115.7 million increased 24.2% year over year.

Operating profit totaled $25.7 million, reflecting an improvement from the year-ago operating loss of $21.2 million.

2021 Guidance

On the basis of its performance till now, CONMED has raised its financial outlook for the full-year 2021.

Revenues are now projected in the range of $1.015-$1.035 billion compared with the previous guidance between $1-$1.03 billion. The Zacks Consensus Estimate is currently pegged at $1.02 billion.

Adjusted earnings per share for the full year is now expected to be in the range of $3.15-$3.25, up from its earlier-provided outlook of $3.05-$3.20. The Zacks Consensus Estimate is currently pegged at $3.15, which matches the lower end of the company-provided guidance.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -9.22% due to these changes.

VGM Scores

At this time, Conmed has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, 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.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Conmed has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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