As the Q1 earnings season wraps, let’s dig into this quarter’s best and worst performers in the surgical equipment & consumables - specialty industry, including Teleflex (NYSE: TFX) and its peers.
The surgical equipment and consumables industry provides tools, devices, and disposable products essential for surgeries and medical procedures. These companies therefore benefit from relatively consistent demand, driven by the ongoing need for medical interventions, recurring revenue from consumables, and long-term contracts with hospitals and healthcare providers. However, the high costs of R&D and regulatory compliance, coupled with intense competition and pricing pressures from cost-conscious customers, can constrain profitability. Over the next few years, tailwinds include aging populations, which tend to need surgical interventions at higher rates. The increasing integration of AI and robotics into surgical procedures could also create opportunities for differentiation and innovation. However, the industry faces headwinds including potential supply chain vulnerabilities, evolving regulatory requirements, and more widespread efforts to make healthcare less costly.
The 4 surgical equipment & consumables - specialty stocks we track reported a slower Q1. As a group, revenues beat analysts’ consensus estimates by 1.8% while next quarter’s revenue guidance was in line.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 8.8% since the latest earnings results.
Teleflex (NYSE: TFX)
With a portfolio spanning from vascular access catheters to minimally invasive surgical tools, Teleflex (NYSE: TFX) designs, manufactures, and supplies single-use medical devices used in critical care and surgical procedures across hospitals worldwide.
Teleflex reported revenues of $700.7 million, down 5% year on year. This print was in line with analysts’ expectations, but overall, it was a slower quarter for the company with a significant miss of analysts’ full-year EPS guidance estimates and constant currency revenue in line with analysts’ estimates.
Teleflex delivered the weakest performance against analyst estimates and slowest revenue growth of the whole group. Unsurprisingly, the stock is down 12% since reporting and currently trades at $120.57.
Read our full report on Teleflex here, it’s free.
Best Q1: Intuitive Surgical (NASDAQ: ISRG)
Pioneering minimally invasive surgery since its first da Vinci system was FDA-cleared in 2000, Intuitive Surgical (NASDAQ: ISRG) develops and manufactures robotic-assisted surgical systems that enable minimally invasive procedures across various medical specialties.
Intuitive Surgical reported revenues of $2.25 billion, up 19.2% year on year, outperforming analysts’ expectations by 3.1%. The business had a satisfactory quarter with a decent beat of analysts’ EPS estimates but a miss of analysts’ sales volume estimates.
Intuitive Surgical pulled off the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 12.8% since reporting. It currently trades at $540.
Is now the time to buy Intuitive Surgical? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: Integra LifeSciences (NASDAQ: IART)
Founded in 1989 as a pioneer in regenerative medicine technology, Integra LifeSciences (NASDAQ: IART) develops and manufactures medical technologies for neurosurgery, wound care, and surgical reconstruction, including regenerative tissue products and surgical instruments.
Integra LifeSciences reported revenues of $382.7 million, up 3.7% year on year, in line with analysts’ expectations. It was a slower quarter as it posted a significant miss of analysts’ EPS guidance.
Integra LifeSciences delivered the weakest full-year guidance update in the group. As expected, the stock is down 25.4% since the results and currently trades at $12.54.
Read our full analysis of Integra LifeSciences’s results here.
LeMaitre (NASDAQ: LMAT)
Founded in 1983 and named after a pioneering vascular surgeon, LeMaitre Vascular (NASDAQGM:LMAT) develops and manufactures specialized medical devices used by vascular surgeons to treat peripheral vascular disease and other circulatory conditions.
LeMaitre reported revenues of $59.87 million, up 12% year on year. This print beat analysts’ expectations by 3.7%. Taking a step back, it was a mixed quarter as it also produced full-year revenue guidance exceeding analysts’ expectations but a miss of analysts’ EPS estimates.
LeMaitre achieved the biggest analyst estimates beat and highest full-year guidance raise among its peers. The stock is down 10.8% since reporting and currently trades at $80.52.
Read our full, actionable report on LeMaitre here, it’s free.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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