Here's Why You Should Retain Teleflex (TFX) Stock for Now
Teleflex TFX is likely to grow in the coming quarters, backed by strong growth in the Vascular business. Urolift is experiencing growth in the hospital setting, particularly in Japan, due to the recent commercialization of the system in the country. However, forex woes and competitive disadvantages remain concerning for the company.
In the past six months, this Zacks Rank #3 (Hold) stock has gained 7.1% compared with the 14.9% rise of the industry and the 14.7% rise of the S&P 500 composite.
The global provider of med-tech products has a market capitalization of $10.56 billion. Teleflex surpassed estimates in each of the trailing four quarters, delivering an average earnings surprise of 6.32%.
Let’s delve deeper.
Tailwinds
Urolift Prospects Strong: Teleflex continues to expand the foundation of clinical data that supports the use of UroLift as a safe and effective minimally invasive treatment for BPH.
In the hospital setting, the company is witnessing consistent growth for UroLift. Outside the United States, UroLift’s recent commercialization in Japan has been a significant step to making this therapy more broadly available to men suffering from BPH. In the fourth quarter of 2023, Japan witnessed healthy revenue growth for UroLift. The company is also proceeding with its plans of initial launch activities in China, with a focus on training surgeons and gaining reimbursements.
Vascular Business Grows: Teleflex has been registering accelerated growth within its vascular product portfolio recently. 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.
During the fourth quarter of 2023, the company achieved double-digit growth in the underlying PICC business. It continued to execute launch activities for its next-generation Arrow VPS Rhythm DLX navigation device and the new Arrow PICC pre-loaded with the NaviCurve Stylet. Teleflex is poised to capture more market shares in peripheral access markets, backed by its new product initiatives.
Business in Asia Holds Long-Term Potential: The company has a solid market base for its Interventional Access and Anesthesia products in this region. In 2023, TFX generated 11.7% of total revenues from Asian regions.
Image Source: Zacks Investment Research
During the fourth quarter of 2023, Asia business revenues increased 12.6% year over year. This upside was broad-based across the region and was backed by robust growth in Korea, India and China. The performance in the quarter was driven by strong commercial execution and solid underlying demand. Our model suggests Asia revenues will witness a 6.7% CAGR through 2026.
Downsides
Competitive Landscape Tough: Teleflex competes with companies ranging from small start-up enterprises to larger and more established companies that have access to significantly greater financial resources. Furthermore, extensive product research and development and rapid technological advances characterize the market in which it competes.
Adverse Foreign Exchange Translation Risks: Foreign exchange is a major headwind for Teleflex because a considerable percentage of its revenues come from outside the United States. The strengthening of the Euro and some other developed market currencies has been constantly hampering the company’s performance in the international markets.
Estimate Trend
The Zacks Consensus Estimate for TFX’s 2024 earnings per share (EPS) has moved down from $13.86 to $13.73 in the past 90 days.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $3.09 billion. This suggests a 3.9% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Cardinal Health CAH, Stryker SYK and DaVita DVA. While Stryker carries a Zacks Rank #2 (Buy), Cardinal Health and DaVita sport a Zacks Rank #1 (Strong Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cardinal Health’s stock has gained 59.5% in the past year. Earnings estimates for Cardinal Health have risen from $7.12 to $7.28 in fiscal 2024 and from $7.91 to $8.03 in fiscal 2025 in the past 30 days.
CAH’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 15.6%. In the last reported quarter, it posted an earnings surprise of 16.67%.
Estimates for Stryker’s 2024 earnings per share have increased from $11.84 to $11.86 in the past 30 days. The company's shares have moved 33.3% upward in the past year, compared with the industry’s rise of 10%.
SYK’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 5.09%. In the last reported quarter, it delivered an average earnings surprise of 5.81%.
Estimates for DaVita’s 2024 earnings per share have moved from $8.46 to $8.97 in the past 30 days. Shares of the company have increased 79% in the past year compared with the industry’s 24% rise.
DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 35.57%. In the last reported quarter, it delivered an average earnings surprise of 22.22%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Stryker Corporation (SYK) : Free Stock Analysis Report
DaVita Inc. (DVA) : Free Stock Analysis Report
Cardinal Health, Inc. (CAH) : Free Stock Analysis Report
Teleflex Incorporated (TFX) : Free Stock Analysis Report
