This medical device company has been hit by COVID-19, so looks very buyable here for the long-term, and it pays a 1.45% dividend. The company is forecasted to grow by 73% next year.
LeMaitre Vascular, Inc. (LMAT)
From Cabot Small-Cap Confidential
The human circulatory system is amazing. But it doesn’t always run smoothly. Roughly 3% of the living population suffer from some sort of peripheral vascular disease (PVD), which occurs when there are issues with blood vessels beyond the heart and brain.
When prevention, treatment and lifestyle changes aren’t enough, surgery may be required. When it is, over 50% of surgeons turn to solutions from LeMaitre Vascular, a Massachusetts-based medical device company with a market cap of $529 million.
LeMaitre offers implantable and disposable devices for 15 markets worth nearly $900 million altogether. The company holds either a #1 or #2 market share position in each one. With a systematic and measured growth strategy management sees potential to keep expanding in the $5 billion market for peripheral vascular solutions.
While there are occasional bumps in the road, LeMaitre’s growth profile is about as steady as you’ll find in a small cap medical device manufacturer. That’s largely because the company focuses precisely on what vascular surgeons need. It introduces new products through internal R&D and through acquisitions. LeMaitre has developed 22 products internally to date, with 13 having reached the market (six failed) and three still in development. LeMaitre has also completed 24 acquisitions over 23 years, with the latest, Artegraft, just completed on June 22.
The company typically delivers low double-digit revenue growth. Revenue grew by 11%, to $117 million in 2019 and should expand at about the same rate in 2019. Adjusted EPS was up 7% to $0.89.
The Covid-19 pandemic will have an impact in 2020 as procedure volumes will fall. But that impact is expected to be largely contained to 2020, when revenue is seen falling 15% to $100 million and adjusted EPS could decline 50% to $0.45.
Looking forward, LeMatire should get back on track in 2021 with revenue up 20% to $120 million and adjusted EPS up 73% to $0.78. The stock has retreated due to the pandemic and lowered near-term growth outlook, but for patient investors with a forward-looking perspective and a desire for a high-quality small cap MedTech stock, LeMaitre should be attractive at current prices.
Tyler Laundon, Cabot Small-Cap Confidential,cabotwealth.com, 978-745-5532, July 7, 2020