Here's Why You Should Retain Integer Holdings (ITGR) Stock Now
Integer Holdings Corporation ITGR is well-poised for growth, courtesy of improving non-medical sales. A robust second-quarter 2022 performance, along with its solid presence in the broader MedTech space, is expected to contribute further. However, stiff competition and a decline in Non-Medical segmental revenues continue to raise concerns.
Shares of this currently Zacks Rank #3 (Hold) company have lost 28.5% compared with the industry’s decline of 35.8% over the past year. The S&P 500 Index has fallen 23.2% in the same time frame.
With a market capitalization of $2.05 billion, ITGR manufactures and develops medical devices and components primarily for original equipment manufacturers (OEMs), which depend on it to design, develop and produce intellectual property-protected medical device technologies. The company’s earnings yield of 7% compares favorably with the industry’s (12.5%). It beat earnings estimates in two of the trailing four quarters and missed twice, the average surprise being 2.9%.
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Key Catalysts
Integer Holdings delivered encouraging results with respect to its Medical segment. In the second quarter of 2022, revenues at the Medical Sales segment rose 12.7% and 5.6% year over year, on a reported and on an organic basis, respectively. Sales of the Cardio & Vascular business, which is part of the Medical segment, gained almost 25% on the back of solid demand in the neurovascular, electrophysiology and structural heart markets, as well as the Oscor and Aran acquisitions.
Apart from this, the company’s robust second-quarter results raise our optimism. Strong year-over-year top-line performance in the second quarter of 2022 is impressive. The robust performance of the Medical segment, along with strength in the majority of its product lines, is encouraging. Continued business recovery despite U.S. labor constraints and global supply-chain disruptions is encouraging. Integer Holdings’ buyout of Aran Biomedical in April raised optimism about the stock.
Integer Holdings’ stable footing in the cardiac, neuromodulation, orthopedics, vascular and advanced surgical markets is encouraging. Its primary customers include large, multi-national original equipment manufacturers and their affiliated subsidiaries.
Integer Holdings has been focusing on its sales efforts when it comes to increasing its market penetration in the Cardio & Vascular, Neuromodulation and Non-Medical Electrochem markets. The company has been taking strategic initiatives to maintain its leadership position in the cardiac rhythm management market.
Factor Hurting the Stock
Competition with respect to the manufacturing of Integer Holdings’ medical products across all of 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. Several 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.
In the second quarter, supplier shortages hampered sales of the Non-Medical segment. Revenues in the Non-Medical segment totaled $10.2 million, down 1.4% year over year.
Estimate Trend
For 2022, the Zacks Consensus Estimate for revenues is pegged at $1.38 billion, indicating an improvement of 13.2% from the year-ago period’s reported figure. The consensus mark for earnings stands at $4.32, suggesting growth of 5.9% from the prior-year quarter.
Integer Holdings Corporation Price
Integer Holdings Corporation price | Integer Holdings Corporation Quote
Stocks to Consider
Some better-ranked stocks in the broader medical space are ShockWave Medical SWAV, McKesson MCK and Semler Scientific SMLR. While ShockWave Medical sports a Zacks Rank #1 (Strong Buy), McKesson and Semler Scientific carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Estimates for ShockWave Medical have improved from earnings of $10.41 to $11.26 for 2022 and $7.94 to $8.30 for 2023 in the past 60 days. SWAV stock has gained 42.9% so far this year.
ShockWave Medical delivered an earnings surprise of 180.1%, on average, in the last four quarters.
McKesson’s earnings per share estimates increased from $23.26 to $24.25 for fiscal 2023 and $25.41 to $26.04 for fiscal 2024 in the past 60 days. MCK has gained 37.9% so far this year.
McKesson delivered an earnings surprise of 13.00%, on average, in the last four quarters.
Estimates for Semler Scientific’s earnings per share increased from $1.37 to $1.58 for 2022 and $2.39 to $2.42 for 2023 in the past 60 days. SMLR has declined 60% so far this year.
Semler Scientific has an earnings yield of 4% against a negative yield for the industry.
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