Company Reports

Teleflex reported first-quarter earnings that were stronger than our expectations, with solid performances in its interventional and OEM product lines. Management reiterated its previous 2024 guidance for key metrics, and we think the first quarter is solid progress toward these full-year figures. We maintain our fair value estimate of $225 per share and view the stock as fairly valued.

We are refreshing our views on Teleflex and reiterating our no-moat rating. We think its portfolio is solid and can see high-single-digit operating profit growth over the next few years. However, the firm is acquisitive, and it's unclear whether any future acquisitions will be value accretive to shareholders given our analysis of its historical returns. We've raised our fair value estimate to $225 per share from $211 due to a decrease in our cost of capital assumption.

Over the past decade, Teleflex has transformed from a diverse industrial, commercial, and healthcare company to one focused on single-use medical devices for surgical and minimally invasive procedures. It has relied heavily on acquisitions and divestitures and is likely to remain acquisitive in future. It generally targets companies with revenue in the $50 million-$300 million range to expand its portfolio and footprint. The firm prioritizes the development and acquisition of relatively inexpensive devices—generally under $1,000—that are unlikely to be targeted by healthcare device intermediaries for cost-savings. As an example, one night's stay in a hospital can lead to billed expenses of over $10,000, with Teleflex’s products accounting for around $500, or 5% of the total hospital cost.

No-moat Teleflex posted solid fourth-quarter results in line with our expectations. We are maintaining our $211 fair value estimate. With inflation, supply chain challenges, and utilization disruptions winding down, we believe Teleflex’s broad portfolio can support a stable longer-term growth trend. Despite the 5% post-earnings price drop, we still think the stock is overvalued.

No-moat Teleflex’s third-quarter results came mostly in line with our expectations. We are maintaining our $211 fair value estimate, and the shares appear about fairly valued. Management raised its full-year revenue growth guidance to 6.4%-6.6% from 5.5%-6.3% in constant currency, mainly driven by the robust performance of surgical and interventional products. We are encouraged to see Teleflex’s top-line growth reverting to the midsingle digits after years of disruption, laying the foundation to reestablish a consistent growth profile.

No-moat Teleflex reported second-quarter results that were largely consistent with our expectations, and we’re maintaining our fair value estimate. We are encouraged to see the continuation of postpandemic rebound in the firm’s 5.9% year-over-year top-line growth (constant currency). The interventional business led quarterly growth with an increase of 9.6% in constant currency fueled by balloon pumps and right heart catheters. We think demand for intra-aortic balloon pumps should remain solid and could potentially increase into 2024 now that Johnson & Johnson (and its legacy Abiomed business) has issued a recall for all Impella products that are also used in high-risk percutaneous interventions and cardiogenic shock.

Over the past decade, Teleflex has transformed from a diverse industrial, commercial, and healthcare company to one focused on single-use medical devices using the dual levers of acquisitions and divestitures. Despite the completion of this transformation, Teleflex is likely to remain a serial acquirer, generally targeting companies in the $50 million-$200 million range where it can expand international scale and increase target company relevancy with group purchasing organizations. The firm prioritizes the development and acquisition of relatively inexpensive products--under $1,000--that are unlikely to be targeted by the healthcare device middlemen for cost savings. As an example, one night's stay in a hospital can lead to billed expenses of over $10,000, with Teleflex’s products accounting for around $500, or 5% of the total hospital cost.

No-moat Teleflex posted strong first-quarter revenue growth across most product categories. Management did not change its adjusted EPS guidance. We believe there is plenty of room for further growth driven by the postpandemic rebound, even though some of the contingent factors, such as procedure volume and labor costs, are somewhat uncertain. We are maintaining our fair value estimate of $211 per share.

Teleflex posted solid fourth-quarter performance, ending the year on a stable note. On one hand, currency was a major headwind across all segments this fiscal year, and supply chain and staffing shortages held back specific business units. On the other, we think the firm did well against these short-term obstacles and looks poised for a strong comparison next year. Management provided a revenue guidance midpoint of 5.5% for fiscal 2023, which is not far off from our estimate of 5.9%. We expect that our fair value estimate will rise modestly after rolling our model and we continue to view the firm lacking a moat.

No-moat Teleflex posted solid third-quarter results, showing positive organic performance while entering an opportune period for its M&A focus. The firm’s stock price has converged with our $211 fair value estimate per share, which we maintain.

Over the past decade, Teleflex has transformed from a diverse industrial, commercial, and healthcare company to one focused on single-use medical devices using the dual levers of acquisitions and divestitures. Despite the completion of this transformation, Teleflex is likely to remain a serial acquirer, generally targeting companies in the $50 million-$200 million range where it can expand international scale and increase target company relevancy with group purchasing organizations. The firm prioritizes the development and acquisition of relatively inexpensive products--under $1,000--that are unlikely to be targeted by the healthcare device middlemen for cost savings. As an example, one night's stay in a hospital can lead to billed expenses of over $10,000, with Teleflex’s products accounting for around $500, or 5% of the total hospital cost.

Over the past decade, Teleflex has transformed from a diverse industrial, commercial, and healthcare company to one focused on single-use medical devices using the dual levers of acquisitions and divestitures. Despite the completion of this transformation, Teleflex is likely to remain a serial acquirer, generally targeting companies in the $50 million-$200 million range where it can expand international scale and increase target company relevancy with group purchasing organizations. The firm prioritizes the development and acquisition of relatively inexpensive products--under $1,000--that are unlikely to be targeted by the healthcare device middlemen for cost savings. As an example, one night's stay in a hospital can lead to billed expenses of over $10,000, with Teleflex’s products accounting for around $500, or 5% of the total hospital cost.

Teleflex had a challenging second quarter driven almost entirely by underperformance of UroLift, which remains the largest individual contributor to the firm’s top line. Our $211 fair value estimate and no-moat rating are unchanged, and shares remain moderately overvalued, in our view.

Teleflex’s first-quarter results were not materially different than our expectations, though foreign exchange had a significant impact on reported results and lower EPS guidance for the year was a bit of a surprise. While we may tweak our model to account for the earnings result and further clarity on the respiratory divestiture, we do not anticipate a change to our $211 fair value estimate or no-moat rating. Shares still look overvalued, in our view, trading at a near-30% premium to fair value, even after an 8% decline following earnings on April 28.

Over the past decade, Teleflex has transformed from a diverse industrial, commercial, and healthcare company to one focused on single-use medical devices using the dual levers of acquisitions and divestitures. Despite the completion of this transformation, Teleflex is likely to remain a serial acquirer, generally targeting companies in the $50 million-$200 million range where it can expand international scale and increase target company relevancy with group purchasing organizations. The firm prioritizes the development and acquisition of relatively inexpensive products--under $1,000--that are unlikely to be targeted by the healthcare device middlemen for cost savings. As an example, one night's stay in a hospital can lead to billed expenses of over $10,000, with Teleflex’s products accounting for around $500, or 5% of the total hospital cost.

No-moat Teleflex had a decent fourth quarter considering omicron headwinds and we maintain our $201 fair value estimate. Despite a price decline of about 20% over the past year, shares remain overvalued.

Over the past decade, Teleflex has transformed from a diverse industrial, commercial, and healthcare company to one focused on single-use medical devices using the dual levers of acquisitions and divestitures. Despite the completion of this transformation, Teleflex is likely to remain a serial acquirer, generally targeting companies in the $50 million-$200 million range where it can expand international scale and increase target company relevancy with group purchasing organizations. The firm prioritizes the development and acquisition of relatively inexpensive products--under $1,000--that are unlikely to be targeted by the healthcare device middlemen for cost savings. As an example, one night's stay in a hospital can lead to billed expenses of over $10,000, with Teleflex’s products accounting for around $500, or 5% of the total hospital cost.

Most medical technology and device companies under our coverage have economic moats, but attractive valuations are hard to find, and the sector trades at an average price/fair value estimate of 1.33.

Over the past decade, Teleflex has transformed from a diverse industrial, commercial, and healthcare company to one focused on single-use medical devices using the dual levers of acquisitions and divestitures. Despite the completion of this transformation, Teleflex is likely to remain a serial acquirer, generally targeting companies in the $50 million-$200 million range where it can expand international scale and increase target company relevancy with group purchasing organizations. The firm prioritizes the development and acquisition of relatively inexpensive products--under $1,000--that are unlikely to be targeted by the healthcare device middlemen for cost savings. As an example, one night's stay in a hospital can lead to billed expenses of over $10,000, with Teleflex’s products accounting for around $500, or 5% of the total hospital cost.

Teleflex saw sales headwinds from the delta variant of the coronavirus in the third quarter, though gross and operating margin expansion offset this on the earnings side. We are increasing our fair value estimate to $193 per share from $183 after tinkering with our model to account for effective cost management through the pandemic. Our no-moat rating is intact. We still see shares as materially overvalued.