Integra LifeSciences Global Prospects Solid, Competition Rife

On Jan 29, we issued an updated research report on Integra LifeSciences Holdings Corporation IART. The stock carries a Zacks Rank #3 (Hold).

Over the past year, Integra LifeSciences has been trading above the broader industry. The stock has gained 26.4%, compared with 4.6% gain of the industry. Integra LifeSciences has been witnessing key developments on the overseas front. International sales within specialty surgical increased in last reported quarter driven by strength in door repair and tissue ablation franchises in Asia Pacific and Europe.

According to the company, the acquisition of Codman will effectively double the company’s international business within this segment. Within Orthopedics & Tissue Technologies, international sales increased double-digits largely on incremental revenues from Derma Sciences.

Moreover, the consistently strong performance of its Orthopedics and Tissue Technologies’ segment buoys optimism. Notably, the company’s Regenerative Technologies is the largest franchise under Orthopedics and Tissue Technologies. In the last reported quarter, the company registered mid-single digits growth in this franchise primarily on the addition of Derma Sciences and strong growth in inpatient skin portfolio. 

Moreover, Integra LifeSciences introduced several products that have expanded its solutions portfolio in the United States hernia repair market and in the European breast reconstruction market. This should spur growth in 2018.

 

We are also encouraged by the company‘s three-pillar strategy: optimize, execute and accelerate growth. According to management, this will help the company’s optimize its infrastructure, deliver commitments through improved planning and communication, and grow through the launch of products, internal development, geographic expansion and strategic acquisitions. 

However, Integra LifeSciences faces significant competition in the surgical implants and medical instruments market. The company needs to be innovative on the product front to fend off competition. Moreover, consolidation in the industry could lead to intense pricing pressure. Further, the company generates significant revenues from the international business, which increases its vulnerability to adverse currency movements.

Key Picks

A few better-ranked stocks in the broader medical sector are PerkinElmer PKI, Bio-Rad Laboratories BIO and ResMed RMD.

Bio-Rad Laboratories has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The company has a long-term expected earnings growth rate of 25%.

PerkinElmer has a long-term expected earnings growth rate of 12.3%. The stock carries a Zacks Rank #2.

ResMed has a long-term expected earnings growth rate of 13%. The stock carries a Zacks Rank #2.

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