Teleflex Faces Tough Times Despite Strong Q3 Earnings
Teleflex Incorporated, valued at $8.9 billion, is a global leader in medical technology. The company, which designs and manufactures single-use medical devices for critical care and surgical procedures, is based in Wayne, Pennsylvania. It serves hospitals, healthcare providers, and home care markets around the world.
Stock Struggles Compared to the Broader Market
Over the past 52 weeks, shares of Teleflex have significantly lagged behind the market. TFX has decreased 13.2% during this time, while the S&P 500 Index ($SPX) has gained 32.1%. This year, TFX stock has fallen by 23.4%, while SPX has risen by 26.2% year-to-date.
TFX’s performance has also been weaker than the Health Care Select Sector SPDR Fund (XLV), which saw an 11.5% rise in the last year and a 7.2% increase so far this year.
Q3 Earnings Report Causes Stock Decline
On Oct. 31, Teleflex reported a better-than-expected Q3 adjusted EPS of $3.49. However, shares plummeted 14.5% following the announcement, as net revenues of $764.4 million fell short of analyst expectations. This revenue shortfall stemmed from challenges in the OEM segment, including a key customer integrating a major product and issues with customers’ inventory management. Following this, management revised its 2024 revenue growth guidance down to 2.9%-3.4%, raising concern among investors.
For the current fiscal year, which ends in December, analysts forecast TFX’s EPS to grow 3.4% year-over-year to $13.98. Notably, the company has consistently surpassed earnings expectations in the last four quarters.
The consensus rating among the 13 analysts tracking Teleflex is a “Moderate Buy,” based on three “Strong Buy” ratings, three “Moderate Buys,” and seven “Holds.” This rating is slightly less optimistic than three months ago, when the stock had four “Strong Buy” ratings.
Analyst Outlook and Price Target Adjustments
On Nov. 4, Truist lowered its price target on Teleflex to $227, while maintaining a “Hold” rating due to the revenue miss and updated guidance, despite the solid Q3 results. The revenue shortfall was linked to a significant customer vertically integrating a product and inventory management challenges. Yet, the analyst believes the stock’s selloff following earnings was excessive.
Currently, TFX trades below the average price target of $248.64, while the highest price target stands at $285. This indicates a potential upside of 49.2% from the current price levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here. More news from Barchart
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