CONMED Corporation CNMD is well poised for growth in the coming quarters, courtesy of its broad product spectrum. The optimism, led by the solid recurring revenue base and potential in General Surgery, is expected to contribute further. However, headwinds from supply-chain constraints and data security threats persist.
Shares of this Zacks Rank #3 (Hold) company have lost 3.3% in the past six months against the industry’s 6.5% growth. The S&P 500 Index has increased 14.3% in the same time frame.
CONMED, a renowned global medical products manufacturer specializing in surgical instruments and devices, has a market capitalization of $2.26 billion. The company projects 19.3% earnings growth for fiscal 2025 and expects to maintain its strong performance going forward.
Its earnings surpassed estimates in three of the trailing four quarters and missed the same once, delivering an average surprise of 3.71%.
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Factors Favoring CNMD Stock
Potential in General Surgery: The segment consists of a complete line of endo-mechanical instrumentation for minimally invasive laparoscopic and gastrointestinal procedures, a line of cardiac monitoring products, as well as electrosurgical generators and related instruments.
CONMED’s General Surgery segment is gaining a competitive edge in the MedTech industry, driven by unique products like the Anchor Tissue Retrieval bag, a key offering in its specimen bag portfolio.
In the third quarter of 2024, revenues in this segment increased 3.6% at constant exchange rates, with domestic sales up 7.4%. The company anticipates that global General Surgery products will continue to grow above market rates due to enhanced sales representatives and improved customer engagement.
Strong demand for CNMD’s AirSeal insufflator in the third quarter had a positive impact. The product is expected to continue driving the top line in the upcoming quarter as well. However, the U.S. foot and ankle business sales are likely to be unfavorably impacted by hurricanes Helene and Milton, which hit the Southeast region of the United States at the end of September and early October. Several procedures were rescheduled during the storms, which may hurt sales in the upcoming quarter.
Broad Product Spectrum: CONMED boasts a diverse range of surgical products across multiple specialties, including orthopedics, laparoscopic, robotic, open surgery, gastroenterology, and pulmonary and cardiovascular medicine. Key innovations such as Hi-Fi Tape and the Hi-Fi suture interface are pivotal for ensuring repair security in rotator cuff surgeries. In 2022, CONMED expanded its Orthopedic portfolio by acquiring In2Bones Global for $145 million, with potential additional earnouts based on growth.
CONMED's broadening product range, including the MicroFree platform, TruShot, Y-Knot Pro, CRYSTALVIEW Pump and Anchor Tissue Retrieval bag, aims to rejuvenate top-line growth. Key products like the IM8000 surgical visualization system and Edge Ablation system position CONMED for improved performance and growth in the market.
Solid Recurring Revenue Base: CONMED's performance is bolstered by its business model, with approximately 85% of revenues coming from recurring sales of single-use disposable products. These items are being increasingly favored by hospitals and clinics as they reduce sterilization costs, minimize infection risks and lower post-operative care expenses.
The remaining 15% of revenues comes from capital equipment sales, such as surgical tools and imaging systems. This, in turn, drives the demand for complementary single-use products, further contributing to CONMED's sustained growth.
Downsides
Regulatory Requirements: CONMED may face potential downsides due to regulatory scrutiny and compliance challenges associated with its classification as a manufacturer of Class II medical devices. The company is subject to inspections by the FDA and international regulatory bodies, which can lead to significant costs in response to compliance issues. These factors could negatively impact the company's operations and financial performance.
Data Security Threats: CONMED may be at risk due to its heavy reliance on information technology (IT) systems for managing sensitive business-related and customer data. The company faces significant cybersecurity threats that could jeopardize the security, confidentiality, and integrity of its data. These factors could negatively impact CONMED's operational stability and financial performance, posing a downside for investors.
CONMED Corporation Price
CONMED Corporation price | CONMED Corporation Quote
Estimate Trend
CONMED is witnessing a positive estimate revision trend for 2024. In the past 30 days, the Zacks Consensus Estimate for earnings improved 1% to $4.03 per share.
The Zacks Consensus Estimate for fourth-quarter 2024 revenues and earnings per share is pegged at $341.3 million and $1.21, respectively, suggesting 4.3% and 14.2% growth from the year-ago reported numbers.
Some better-ranked stocks from the medical industry are Masimo MASI, AngioDynamics ANGO and Globus Medical GMED.
Masimo, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 13.5% for 2025. You can see the complete list of today’s Zacks #1 Rank stocks here.
MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 17.10%. Masimo’s shares have risen 35.5% in the past six months compared with the industry’s 0.9% growth.
AngioDynamics, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 38.2% for 2025. ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.
AngioDynamics’ shares have gained 12% in the past six months compared with the industry’s 0.9% growth.
Globus Medical, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 14.1%. GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.1%. Its shares have risen 28.1% in the past six months compared with the industry’s 0.9% growth.
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