Here's Why Investors Should Buy CONMED (CNMD) Stock Now

Zacks Equity Research

CONMED Corporation CNMD is one of the top players in the MedTech space. A solid fourth-quarter show and consistent focus on Research and Development (R&D) are working in favor of the stock.

In a year’s time, this Zacks Rank #2 (Buy) stock has rallied 18.1% against the industry’s 2.6% decline. The current level is also significantly higher than the S&P 500’s 1.9% rise.

What’s Favoring CONMED?

In the recently reported fourth quarter of 2018, CONMED posted adjusted earnings per share of 73 cents, in line with the Zacks Consensus Estimate. Also, the figure improved 5.8% from the year-ago quarter.

The New York-based medical products manufacturer posted revenues of $242.4 million, up 8.9% on a year-over-year basis and 10.8% at constant currency (cc). Notably, the figure surpassed the Zacks Consensus Estimate of $229.2 million.

It is encouraging to note that the company expects 2019 sales growth in the range of 5-6% at cc. Adjusted diluted net earnings per share for 2019 are projected in the range of $2.42 to $2.47, representing growth of 11-13% over 2018.

CONMED’s steady focus on innovation instills investor confidence. By the end of fourth-quarter 2018, management at CONMED announced that solid organic R&D pipeline and product innovation will be lending the company a competitive edge.

In the quarter, the company’s R&D expenses totaled $10.4 million or 4.3% of total sales, which shows a 23.8% increase over $8.4 million recorded in the prior-year quarter.

Additionally, management at CONMED confirmed that it will continue to increase investments in R&D, which should be between 4.5% and 5% of net sales in 2019.

CONMED Corporation Price and Consensus


CONMED Corporation Price and Consensus | CONMED Corporation Quote

Which Way Are Estimates Treading?

The Zacks Consensus Estimate for first-quarter 2019 earnings is pegged at 54 cents, reflecting growth of 1.9% on a year-over-year basis. The same for the revenues stands at $209.9 million, mirroring a 3.9% improvement year over year.

For 2019, the Zacks Consensus Estimate for revenues is pegged at $898.4 million, reflecting growth of 4.5%. The same for adjusted earnings is pinned at $2.44, indicating a year-over-year rise of 11.9%.

Other Key Picks

Other top-ranked stocks in the broader medical space are Penumbra, Inc. PEN, Wright Medical Group N.V. WMGI and DexCom. Inc. DXCM. Notably, each of these stocks currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Penumbra’s long-term earnings growth rate is expected at 20%.

Wright Medical’s long-term earnings growth rate is estimated at 11%.

DexCom’s next-quarter earnings per share is projected to grow at 56.3%.

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