This medical device company beat analysts’ estimates by $0.09 last quarter and 13 analysts have increased their EPS estimates for the company in the past 30 days.
Integra Lifesciences Hldgs Cor (IART)
From Argus Weekly Staff Report
We are reaffirming our BUY rating on Focus List selection Integra LifeSciences Holdings Corp. (IART) and raising our price target to $80 from $64. Based on the company’s strong 1Q18 results and revised full-year guidance, we expect continued EPS growth in 2018. We expect growth this year to be driven by the acquisition of Codman Neurosurgery, the launch of new products, and investments in expanded sales channels. In particular, the integration of Codman, acquired in October 2017, has expanded Integra’s specialty surgery portfolio and more than doubled its international sales force.
Integra delivered solid 1Q18 results on April 25, as adjusted EPS rose 49% from the prior year to $0.58 and topped the consensus forecast of $0.49.
Along with its 1Q18 results, management raised its 2018 guidance. It now expects adjusted EPS of $2.34-$2.42, up from a prior $2.25-$2.35. The midpoint of the revised range implies year-over-year growth of 26.1%. Integra also raised its revenue guidance to $1.47-$1.49 billion from $1.46-$1.48 billion. In raising its guidance, management cited the strong first-quarter performance of Codman Specialty Surgery as well as favorable currency translation.
Based on the strong 1Q18 results and management’s updated guidance, we are raising our 2018 adjusted EPS estimate to $2.37 from $2.30. We are establishing a 2019 estimate of $2.73.
IART trades at 22.6-times our 2019 EPS estimate, above the average of 17.9 for peers in our med-tech coverage universe. However, we believe this premium is warranted given Integra’s strong sales growth, steady flow of new products, success in integrating acquisitions, and rising margins. In particular, the acquisition and integration of Codman Neurosurgery is progressing better than expected, as evidenced by Codman’s strong contribution to 1Q18 revenue.
As the smallest med-tech company in our coverage universe (by market cap), Integra is also ‘moving the needle’ on revenue and EPS growth from its recent M&A deals. We are reiterating our BUY rating on IART with a revised price target of $80.
Jim Kelleher, CFA, Argus Weekly Staff Report, www.argusresearch.com, 212-425-7500, May 10, 2018