Reasons to Add Integer Holdings (ITGR) Stock to Your Portfolio
Integer Holdings Corporation ITGR has been gaining from its improving non-medical sales. The optimism led by a solid second-quarter 2023 performance and its solid foothold in the broader MedTech space are expected to contribute further. However, dependence on third-party suppliers and stiff competition continue to concern the company.
Over the past year, this Zacks Rank #2 (Buy) stock has gained 22.7% against the 6.8% decline of the industry it belongs to. The S&P 500 has witnessed 8.7% growth in the said time frame.
The renowned medical device outsource manufacturer has a market capitalization of $2.68 billion. The company projects 12.1% growth for the next five years and expects to maintain its strong performance. Integer Holdings surpassed the Zacks Consensus Estimate in all the trailing four quarters, delivering an earnings surprise of 8.4%, on average.
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Let’s delve deeper.
Improving Non-Medical Sales: We are upbeat about Integer Holdings’ improvement in its Non-Medical sales. In the second quarter of 2023, revenues at the Non-Medical Sales segment rose 6.7% year over year both on a reported and organic basis. This was driven by strong demand in military and environmental market segments.
Solid Foothold in the Broader MedTech Space: We are optimistic about Integer Holdings’ stable footing in the cardiac, neuromodulation, orthopedics, vascular and advanced surgical markets. Its primary customers include large, multi-national original equipment manufacturers and their affiliated subsidiaries.
Integer Holdings has been focusing on its sales efforts to increase its market penetration in the Cardio & Vascular, Neuromodulation and Non-Medical Electrochem markets. The company is also making strategic initiatives to maintain its leadership position in the cardiac rhythm management market.
Strong Q2 Results: Integer Holdings’ robust second-quarter 2023 results raise our optimism. The company registered strong year-over-year top-line and bottom-line performances. Robust results by both segments and strength in all three product lines of the Medical Sales segment were recorded. The expansion of the adjusted operating margin was also seen.
Downsides
Stiff Competition: Competition with respect to the manufacturing of Integer Holdings’ medical products across all 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. Many 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.
Dependence on Third-Party Suppliers: Integer Holdings’ business depends on a continuous supply of raw materials, which may be susceptible to fluctuations due to transportation issues, government regulations and price controls, among others. Significant increases in the cost of raw materials, which cannot be recovered through increases in the prices of the company’s products, could adversely affect its operating results.
Estimate Trend
Integer Holdings is witnessing a positive estimate revision trend for 2023. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 4.3% north to $4.33 per share.
The Zacks Consensus Estimate for the company’s third-quarter 2023 revenues is pegged at $374.2 million, suggesting a 9.2% rise from the year-ago quarter’s reported number.
Other Key Picks
A few other top-ranked stocks in the broader medical space are DaVita Inc. DVA, HealthEquity, Inc. HQY and McKesson Corporation MCK.
DaVita, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 12.7%. DVA’s earnings surpassed estimates in three of the trailing four quarters and missed once, with an average surprise of 21.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DaVita has gained 0.3% against the industry’s 12.3% decline over the past year.
HealthEquity, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 22.2%. HQY’s earnings surpassed estimates in all the trailing four quarters, with an average of 13%.
HealthEquity has lost 0.4% compared with the industry’s 16.4% decline over the past year.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.7%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 8.1%.
McKesson has gained 15.7% compared with the industry’s 7.1% rise over the past year.
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DaVita Inc. (DVA) : Free Stock Analysis Report
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HealthEquity, Inc. (HQY) : Free Stock Analysis Report
Integer Holdings Corporation (ITGR) : Free Stock Analysis Report
