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Here's Why You Should Consider Betting on CONMED Stock Now

Zacks Equity Research

CONMED Corporation CNMD is well poised for growth backed by broad product portfolio, strong international sales and solid gains from its core units — Orthopedic Surgery and General Surgery.

The stock currently carries a Zacks Rank #2 (Buy).

Price Performance

Shares of CONMED have gained 57%, outperforming the industry’s growth of 11.2% on a year-to-date basis. Meanwhile, the S&P 500 Index rallied 15.3% in same timeframe.

What’s Favoring the Stock?

CONMED’s General Surgery segment’s sustained solid performance continues to bolster the top line. The company’s unique products and solutions within this segment provide it competitive edge in the MedTech space. Among unique products of General Surgery, the Anchor Tissue Retrieval bag deserves a mention.

Moreover, CONMED boasts a broad product portfolio that enables it to accelerate top-line growth over a considerable period. Additionally, product innovations will not only fortify its product portfolio but also enhance overall performance.

Further, the company’s continued focus on Research and Development (R&D) helps in instilling investor confidence. Looking forward, CONMED’s management confirmed that it will continue to increase investments in R&D, which is likely to be 4.5-5% of net sales in 2019.

The company is reaping benefits from the improving trend of utilizing minimally invasive techniques as significant percentage of its products were created for these procedures.

In fact, a research report by Allied Market Research suggests that the global minimally invasive surgical instruments market is estimated to reach $52.98 billion by 2023 at a CAGR of 8.7% from 2017 to 2023. We believe solid market trends like these would fortify CONMED’s foothold in the niche space.

Notably, raised 2019 outlook buoys optimism for the stock.

CONMED expects 2019 sales growth to range between $951 million and $958 million. This projection includes an increase to organic constant currency sales growth in the range of 6-6.5%, up from the prior range of 5.25-6.25%. The company forecasts adjusted diluted net earnings per share in the range of $2.52 to $2.57, up from the previously guided range of $2.47-$2.52. This indicates growth of 16-18% over 2018.

Which Way are Estimates Headed?

For 2019, the Zacks Consensus Estimate for revenues is pegged at $955 million, indicating an improvement of 11.1% from the year-ago quarter. The same for earnings stands at $2.55, suggesting growth of 16.9% from the year-ago reported figure.

Other Key Picks

Some other top-ranked stocks from the broader medical space are Baxter International Inc. BAX, Amedisys, Inc. AMED and AmerisourceBergen Corporation ABC, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Baxter has a long-term earnings growth rate of 12.8%.

Amedisys has a long-term earnings growth rate of 16.3%.

AmerisourceBergen has a long-term earnings growth rate 7.9%.

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