Here's Why You Should Retain Teleflex (TFX) Stock for Now
Teleflex TFX is likely to grow in the coming quarters, backed by the strength of its diversified Interventional products. Across the markets in densely populated Asia, the strong demand for the company’s wide product line is boosting its performance. Further, strong solvency is an added upside. However, elevated expenses and competitive disadvantages remain concerning for the company.
In the past year, this Zacks Rank #3 (Hold) stock has decreased 0.2% against the 3.7% fall of the industry and the 25.3% rise of the S&P 500 composite.
The global provider of med-tech products has a market capitalization of $11.72 billion. The company has an earnings yield of 5.38% compared to the industry’s -6.27%. Teleflex surpassed estimates in each of the trailing four quarters, delivering an average earnings surprise of 5.98%.
Let’s delve deeper.
Tailwinds
Strong Momentum in Interventional: The Interventional product category is benefiting from the offering of devices that facilitate a variety of applications to diagnose and deliver treatment via the vascular system of the body. The segment’s diversified portfolio, including balloon pumps, right heart catheters and access and closure, and MANTA, the Vascular Closure device, all contributed meaningfully to the growth. Simultaneously, TFX remains excited to build momentum for 2023 with a focus on complex PCI and structural heart.
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In June 2023, Teleflex received the FDA clearance for Wattson Temporary Pacing Guidewire. The development will expand the company’s Structural Heart Portfolio with the first commercially available bipolar temporary pacing guidewire designed specifically for use during transcatheter aortic valve replacement and balloon aortic valvuloplasty. Per the latest update, the company is in the final stages of completion for the commercial launch.
Vascular Business Grows: The Vascular Access product category offers devices that facilitate a variety of critical care therapies and other applications with a focus on helping reduce vascular-related complications. Over the long term, TFX remains positioned for dependable growth with category leadership in Central Venous Catheters and midlines, anticipated share gains with a novel coated PICC portfolio and new product introductions.
The initial launch activities for its next-generation Arrow VPS Rhythm DLX navigation device and the new Arrow PICC pre-loaded with the NaviCurve Stylet have generated a positive customer response. In June 2023, Teleflex’s Arrow EZ-IO Needle became the first and only Intraosseous Needle to receive FDA 510(k) clearance for MR Conditional labeling.
Business in Asia Holds Long-Term Potential: The company has a solid market base for its Interventional Access and Anesthesia products in the Asia region. In the third quarter of 2023, Asia demonstrated stable demand across the majority of the region with a 17.1% year-over-year increase and continues to be an important growth driver for Teleflex. Revenues in China exceeded more than 20% compared to the last year and reflected solid underlying demand.
Downsides
Escalating Expenses Put Pressure on the Bottom Line: Teleflex has been grappling with escalated expenses for a while. Deteriorating international trade, with global inflationary pressure leading to a tough situation related to raw material and labor costs, as well as freight charges and rising interest rates, all have put the medical device space in a tight spot.
The company has implemented many restructuring, realignment and cost-reduction initiatives, including facility consolidations, organizational realignments and reductions in workforce. However, there lies uncertainty regarding the extent to which Teleflex will realize the benefits of these or future initiatives. All these issues are putting pressure on the bottom line.
Increasing Competition: Teleflex competes with companies ranging from small start-up enterprises to larger and more established companies that have access to significantly greater financial resources. Moreover, competitors having clinical superiority and innovative features that enhance patient benefit, product reliability, performance, customer and sales support and cost-effectiveness can be a disadvantage for the company.
Estimate Trend
The Zacks Consensus Estimate for TFX’s 2023 earnings per share (EPS) has remained constant at $13.41 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $2.97 billion. This suggests a 6.4% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Haemonetics HAE, Insulet PODD and DexCom DXCM.
Haemonetics has an estimated earnings growth rate of 28.4% for fiscal 2024 compared with the industry’s 15.3%. HAE’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 16.1%. Its shares have decreased 1.3% compared with the industry’s 3.1% fall in the past year.
HAE carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Insulet, sporting a Zacks Rank #1 at present, has a long-term estimated earnings growth rate of 39.2% compared with the industry’s 11.7%. Shares of the company have decreased 34.9% compared with the industry’s 3.1% decline over the past year.
PODD’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 105.1%. In the last reported quarter, it delivered an average earnings surprise of 77.5%.
DexCom, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 33.6% compared with the industry’s 13.8%. Shares of DXCM have increased 3.3% against the industry’s 3.3% decline over the past year.
DXCM’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.4%. In the last reported quarter, it delivered an average earnings surprise of 47.1%.
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Haemonetics Corporation (HAE) : Free Stock Analysis Report
DexCom, Inc. (DXCM) : Free Stock Analysis Report
Teleflex Incorporated (TFX) : Free Stock Analysis Report
Insulet Corporation (PODD) : Free Stock Analysis Report
