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Medtech Supplier IntriCon Rallies After Bullish Stifel Initiation

Shanthi Rexaline

IntriCon Corporation (NASDAQ: IIN), a medical technology company and major supplier to  Medtronic PLC (NYSE: MDT)'s diabetes division, is "one of the more interesting and undiscovered small-cap names" in its sector, according to Stifel. 

The Analyst

Analyst Jonathan Block initiated coverage of IntriCon shares with a Buy rating and 12-24-month price target of $35, suggesting 79-percent upside. The stock was added to Stifel's Select List.

The Thesis

IntriCon is a key beneficiary of Medtronic's current and future product cycles, Block said in a Monday note.

The medical division's prospects alone justify 50-percent stock appreciation, the analyst said.

"We see ongoing tailwinds to IntriCon's relationship with Medtronic (81 percent of segment sales) and our 2017-2020 revenue CAGR specific to the Medtronic agreement is 20-percent-plus." 

IntriCon is at the forefront of democratizing the $17-billion worldwide hearing market, Block said. The market could be radically changed by favorable legislation that would do away audiologists for recommending hearing aids in the mild-to-moderate segment and possibly allow users to control OTC hearing aids, Block said.

This could occur over the next 12-24 months, the analyst said. 

"With IntriCon being the only non-Big 6 manufacturer with an FDA-approved hearing aid coupled with the company's recent investments, IntriCon appears uniquely positioned to capitalize on this very large market opportunity," Block said. 

The Price Action

IntriCon shares lost about 1 percent year-to-date through Monday.

The stock was rallying after the upgrade and was up 20.66 percent at the time of publication Tuesday.

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Latest Ratings for IIN

Date Firm Action From To
Apr 2018 Stifel Nicolaus Initiates Coverage On Buy
Aug 2017 Longbow Research Downgrades Buy Neutral
Aug 2014 Dougherty Initiates Coverage on Buy

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