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Here's Why You Should Hold on to CONMED (CNMD) Stock for Now

Zacks Equity Research

CONMED Corporation CNMD is well poised for growth on a broad product portfolio and an impressive view for 2019. However, unfavorable foreign exchange raises concern.

Price Performance

Shares of the Zacks Rank #3 (Hold) company have gained 25.5% against the industry’s decline of 19.4% in a year’s time. Meanwhile, the S&P 500 Index has rallied 7.1% in the same timeframe.

What’s Favoring the Stock?

CONMED offers a broad line of surgical products. The company’s product portfolio consists of several new devices in the Orthopedic, Laparoscopic, Robotic, Open Surgery, Gastroenterology, Pulmonary and Cardiology sections. Innovative products like Hi-Fi Tape and Hi-Fi suture interface represent a critical component of repair security in rotator cuff repair space.

Furthermore, CONMED’s AssistArm technology delivers unique limb positioning techniques. Other products, including three sports medicines and three endomechanical offerings, an electrosurgical council and a new 2D Arthroscopy video system, are worth a mention.

It is encouraging to note that the company has recently raised its 2019 view.

Notably, revenues are expected within $951 million and $958 million. This projection includes an increase in organic constant currency sales growth to the range of 6-6.5%, from the prior 5.25-6.25%.

CONMED forecasts adjusted earnings per share in the range of $2.52 to $2.57, up from the previously guided $2.47-$2.52. This indicates growth of 16-18% over 2018 levels.

Deterrents

CONMED derives a significant portion of its revenues from international operations. Hence, unfavorable foreign exchange movements have continued to impede sales. In fact, for 2019, the negative impact to 2019 sales from forex is now anticipated at 50 basis points.

That’s not all. CONMED operates in a highly competitive environment with the presence of companies like Johnson & Johnson JNJ, Medtronic MDT and Smith & Nephew.

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 17% from the year-ago reported figure.

CONMED Corporation Price and Consensus

CONMED Corporation Price and Consensus

CONMED Corporation price-consensus-chart | CONMED Corporation Quote

A Key Pick

A better-ranked stock in the broader medical space is McKesson Corporation MCK.

McKesson’s long-term earnings are projected to grow 7%. The stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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