On Thursday, Needham, a financial advisory firm, adjusted the price target for CONMED Corporation (NYSE:CNMD), a medical technology company, reducing it to $97 from the previous $106. The firm maintained its Buy rating on the stock despite the adjustment.
This revision follows CONMED's second-quarter financial results, which revealed a revenue shortfall alongside an earnings per share (EPS) figure that exceeded the consensus.
CONMED reported that its organic revenue growth slowed to 5.2% year-over-year in the second quarter of 2024, down from 5.9% in the first quarter of the same year. The company has been experiencing ongoing supply chain challenges, particularly within its Orthopedic Surgery division.
Despite these difficulties, CONMED observed a rise in gross margin by 90 basis points year-over-year and an increase in operating margin by 140 basis points over the same period.
Management at CONMED has revised their revenue and EPS guidance downward, anticipating that the supply chain issues affecting their Orthopedics Surgery business will persist into the second half of 2024. However, there was a positive note regarding the US AirSeal capital equipment, which saw growth exceeding the previous year's figures.
Additionally, the percentage of surgeons returning to use AirSeal after their initial committed procedures with the da Vinci 5 systems remained consistent with the return rates for older da Vinci systems.
The adjustment in CONMED's price target to $97 is attributed to a reduced EPS estimate for the year 2025, as explained by the financial advisory firm. Despite the lowered target, the firm's Buy rating indicates a continued positive outlook on the company's stock performance going forward.
In other recent news, financial advisory firm Needham has revised the price target for CONMED Corporation, reducing it to $97 from an earlier $106, while maintaining a Buy rating on the stock. This adjustment follows CONMED's recent Q2 financial results, which showed a revenue shortfall but an EPS figure surpassing expectations.
The company reported a slowdown in its organic revenue growth to 5.2% YoY in Q2 of 2024, attributing this to ongoing supply chain challenges, particularly within its Orthopedic Surgery division.
Despite these difficulties, CONMED managed to increase its gross margin by 90 basis points YoY and its operating margin by 140 basis points during the same period. However, the company revised its revenue and EPS guidance downwards, predicting that the supply chain issues will continue to affect their Orthopedics Surgery business into the second half of 2024.
On a positive note, the company reported growth in its US AirSeal capital equipment, surpassing previous year's figures. The return rates for surgeons using AirSeal after their initial procedures with the da Vinci 5 systems remained consistent with rates for older da Vinci systems.
Needham's revised price target is based on a reduced EPS estimate for 2025. This revision was triggered by the higher-than-expected placements of Intuitive Surgical (NASDAQ:ISRG)'s latest da Vinci 5 surgical systems, which are anticipated to pose a near-term challenge to CONMED's revenue and EPS. Despite the revised target, Needham's Buy rating suggests a continued positive outlook on the company's stock performance.
InvestingPro Insights
As CONMED Corporation navigates the current market, InvestingPro data provides a deeper understanding of the company's financial health and potential. With a market capitalization of $2.13 billion, CONMED's valuation reflects a P/E ratio of 26.18, which is noteworthy given the company's near-term earnings growth potential. This is further underscored by a low PEG ratio of 0.14 over the last twelve months as of Q1 2024, suggesting that the stock may be undervalued relative to its earnings growth.
From an operational standpoint, CONMED has demonstrated solid performance with a gross profit margin of 55.4% and an operating income margin of 10.8% in the same period. These metrics are complemented by an EBITDA growth of nearly 31.77%, reflecting the company's ability to increase its earnings before interest, taxes, depreciation, and amortization at a robust rate.
InvestingPro Tips highlight that CONMED is expected to see net income growth this year and has maintained dividend payments for 13 consecutive years, which may appeal to income-focused investors. Additionally, the company's liquid assets exceed its short-term obligations, indicating a strong liquidity position. For investors seeking further insights, InvestingPro offers additional tips on CONMED, which can be found at https://www.investing.com/pro/CNMD.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.