Yahoo Finance 3 Reasons to Retain Integer Holdings (ITGR) Stock For Now
Integer Holdings Corporation ITGR is well-poised for growth in the coming quarters, backed by its improving non-medical sales. A robust third-quarter 2021 performance, along with its solid foothold in the broader MedTech space, is 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 #3 (Hold) stock has surged 1.5% compared with 6.1% growth of the industry it belongs to and the S&P 500 composite’s rise of 28.7%.
The renowned medical device outsource manufacturer has a market capitalization of $2.79 billion. The company projects 18.3% growth for 2022 and expects to maintain its strong performance. It has delivered an earnings surprise of 13.57% for the past four quarters, on average.
Image Source: Zacks Investment Research
Let’s delve deeper.
Improving Non-Medical Sales: We are upbeat about Integer Holdings’ improvement in its Non-Medical sales. In the third quarter of 2021, revenues at the Non-Medical Sales segment rose 14.5% year over year, both on a reported and on an organic basis. Sales at the Electrochem product line, a part of the Non-Medical segment, improved 14% on the back of continued recovery of the energy market. Management is also optimistic about the continued recovery in the energy market in the second half of 2021 and into 2022.
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. The company also has a presence in the non-medical power solutions market. Its brands include Greatbatch Medical, Lake Region Medical and Electrochem. Its primary customers include large, multi-national OEMs 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 is also making strategic initiatives to maintain its leadership position in the cardiac rhythm management market.
Strong Q3 Results: Integer Holdings’ robust third quarter results raise our optimism. Strong segmental performances, along with strength in the majority of the product lines, were impressive. Despite the U.S. labor constraints and global supply chain disruptions, continued business recovery is encouraging. Expansion of gross margin also bodes well for the stock. A raised adjusted earnings per share outlook for the year and management’s expectations of a strong sales growth in the fourth quarter of 2021 raise optimism.
Downsides
Stiff Competition: 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. 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 2021. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 1.8% north to $4.05 per share.
The Zacks Consensus Estimate for the company’s fourth-quarter 2021 revenues is pegged at $304.6 million, suggesting a 13.3% rise from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Laboratory Corporation of America Holdings LH or LabCorp, Thermo Fisher Scientific Inc. TMO and AMN Healthcare Services AMN. All three stock currently carries a Zacks Rank #2 (Buy).
LabCorp has an estimated long-term growth rate of 10.6%. LH’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.73%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
LabCorp has gained 33.6% compared with the industry’s 10.7% rise over the past year.
Thermo Fisher has an estimated long-term growth rate of 14%. TMO’s earnings surpassed estimates in the trailing four quarters, the average surprise being 9.02%.
Thermo Fisher has gained 27.4% compared with the industry’s 6.1% rise over the past year.
AMN Healthcare has an estimated long-term growth rate of 16.2%. AMN’s earnings surpassed estimates in the trailing four quarters, the average surprise being 19.51%.
AMN Healthcare has gained 68.6% against the industry’s 51.3% fall over the past year.
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
Laboratory Corporation of America Holdings (LH) : Free Stock Analysis Report
Thermo Fisher Scientific Inc. (TMO) : Free Stock Analysis Report
AMN Healthcare Services Inc (AMN) : Free Stock Analysis Report
Integer Holdings Corporation (ITGR) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
