Here's Why You Should Add Teleflex (TFX) to Your Portfolio
Teleflex Incorporated TFX primarily designs, develops, manufactures and supplies single-use medical devices for common diagnostic and therapeutic procedures in critical care and surgical applications. At present, the company has seven reportable segments, following the acquisition of Vascular Solutions in 2017. The market is optimistic about the stock given the impressive first-quarter 2021 international performance, including America (on strong sales of Vascular Access and respiratory products) and Asia (on growing product demand).
Over the past year, this Zacks Rank #2 (Buy) stock has gained 1.4% compared with 13% growth of the industry and 34.6% rise of the S&P 500 composite.
The renowned global medical device company has a market capitalization of $18.24 billion. Its last-reported first-quarter 2021 earnings surpassed the Zacks Consensus Estimate by 17.6%.
Over the past five years, the company registered earnings growth of 10.5%, way ahead of the industry’s 4.1% rise and the S&P 500’s 2.8% increase. The long-term expected growth rate is estimated at 11% compared with the industry’s growth projection of 16.5% and the S&P 500’s 10.9%.
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Let’s delve deeper.
Key Drivers
International Performance: We are optimistic about Teleflex’s stable first-quarter performance in America and its enhanced focus on expanding in densely populated geographies like Asia. Revenues across the United States rose 4.7% or 8.3% in the first quarter of 2021, driven by strength in Vascular, Anesthesia, Surgical and Interventional Urology on a day’s adjusted basis. Teleflex also has a solid market base for its Interventional Access and Anesthesia products in Asia. The company registered 10.3% growth, with no selling day impact in the region in the first quarter.
Vascular Business Grows: Investors are upbeat about the accelerated growth within Teleflex’s vascular and interventional access product portfolios that followed the acquisition of Vascular Solutions. Within Vascular Access, revenues increased 5.8% or 9.3% in the first quarter, adjusting for selling days banking on strong contributions from central venous catheters, EZ-IO and PICC product lines.
Urolift Gains Traction: Market is optimistic about the company’s UroLift System that grew approximately 1.9% in the reported quarter, adjusting for selling days. The strong growth trends that occurred for UroLift in March continued in April on improvements in average daily sales trends. The company has trained 115 new urologists with the UroLift in the first quarter and is well on track to achieve an annual target of training 450 to 500 new urologists during 2021.Teleflex has also doubled the awareness for UroLift in the targeted population of men with benign prostatic hyperplasia and has decided to increase its investment in 2021 and run a national campaign for the full year.
Downsides
Prominent Coronavirus Impact: Telefix has not been spared from the impact of the ongoing coronavirus-led pandemic, which is wreaking havoc on the entire economy. The company’s revenues declined 2.6% in the first quarter 2021 on a constant currency basis, due to lingering COVID-19 headwinds. The company experienced a surge in the elective procedure deferrals during the quarter. The Original Equipment Manufacturer and Development Services (OEM) segment continued to see a lagged impact related to COVID recovery.
Competitive Landscape: Teleflex faces significant competition from MedTech bigwigs like Becton, Dickinson and Company BDX. Per the company, it competes primarily on the basis of clinical superiority and innovative features that enhance patient benefit, product reliability, performance, customer and sales support and cost-effectiveness.
Estimate Trend
Teleflex has been witnessing a positive estimate revision trend for 2021. Over the past 90 days, the Zacks Consensus Estimate for its earnings has moved 1% up to $12.76.
The Zacks Consensus Estimate for second-quarter 2021 revenues (slated to be reported on Jul 29) is pegged at $680.85 million, suggesting a 20.1% surge from the year-ago reported number.
Zacks Rank and Key Picks
A few better-ranked stocks from the broader medical space include Apollo Medical Holdings, Inc. AMEH and IDEXX Laboratories, Inc. IDXX.
Apollo Medical, sporting a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 20%. You can see the complete list of today’s Zacks #1 Rank stocks here.
IDEXX, which carries a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 19.6%.
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Becton, Dickinson and Company (BDX) : Free Stock Analysis Report
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