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Teleflex Incorporated’s (TFX - Free Report) adjusted earnings per share (EPS) from continuing operations of $2.77 for the third quarter of 2020 were down 6.7% year over year. However, the bottom line surpassed the Zacks Consensus Estimate by 22%.
GAAP EPS for the third quarter was $2.46, reflecting a 49.3% massive plunge from the year-ago $4.85.
Revenues in Detail
Net revenues in the third quarter dropped 3.1% year over year to $628.3 million and declined 4.1% on a constant exchange rate or CER. The top line surpassed the Zacks Consensus Estimate by 1.3%. Per the company’s estimates, COVID-19 had a net negative impact on revenues of approximately $78 million or 12%.
Segmental Revenues
In the third quarter, the Vascular Access segment reported net revenues of $160 million, up 6.8% year over year at CER. The company registered strong growth within both PICC and EZ-IO products. COVID-19 had a 1% positive impact on this segment’s sales in the third quarter.
The Interventional business registered net revenues of $93.2 million, down 13.5% on a year-over-year basis at CER. Revenues were largely dented by delay in the recovery of certain non-emerging procedures along with the negative impact stemming from a catheter recall that occurred during the quarter.
Teleflex Incorporated Price, Consensus and EPS Surprise
Within the Anesthesia segment, net revenues dropped 14.4% to $75.7 million, primarily owing to lower sales of laryngeal masks, regional anesthesia and airway management products.COVID-19 had an approximately 10% negative impact on this business in the quarter.
The Surgical segment recorded net revenues of $82.2 million, reflecting 12.3% fall at CER due to lower sales of ligation portfolio and instruments. The company witnessed a significant 13% headwind from COVID-19 on this business.
Revenues of $81.8 million in the Interventional Urology segment improved 11% on a year-over-year basis at CER. The recovery of elective procedures contributed to this business in the third quarter. Teleflex estimated an approximate 29% COVID-19-related headwind in the third quarter on this business.
Meanwhile, OEM recorded revenue growth of $49.4 million, down 11.8%. This business saw delayed impact of COVID-19 relative to other businesses.
The Other product segment (consisting of the company’s respiratory and urology care products) registered net revenues of $86 million, highlighting growth of 0.5% at CER. The growth was primarily supported by increased demand for certain humidification and respiratory products resulting from COVID-19.
Margins
In the reported quarter, gross profit totaled $329.3 million, down 7.3% year over year. Gross margin contracted 235 basis points (bps) to 52.4%.
Overall adjusted operating loss was $171.6 million compared with adjusted operating loss of $209.3 million in the year-ago period.
Liquidity Position
Teleflex exited the third quarter with cash and cash equivalents of $347.5 million, down from $553.5 million at the end of the second quarter.
Cumulative cash flow used in operating activities from continuing operations at the end of the third quarter was $241.5 million against net cash provided by operating activities of $289.2 million in the year-ago period.
2020 Outlook
Teleflex is currently unable to ascertain the scope and duration of the pandemic as well as quantify the actual impact. The company also anticipates material disruption caused by the evolving COVID-19 pandemic and macroeconomic environment. It further expects significant adverse financial impact of the coronavirus pandemic. Accordingly, this time too the company has not provided its 2020 outlook.
However, it expected sequential improvement during the fourth quarter of 2020 compared with the third quarter.
Our Take
Teleflex reported better-than-expected third-quarter results. However, on a year-over-year basis, earnings and sales both declined significantly. Most of the segments registered revenue decline organically on a 12% aggregated negative impact from COVID-19. Margin debacle is another major concern.
On a positive note, there has been significant sequential improvement in the company’s segmental performance on gradual recovery of the economy.
Growth within the Americas was driven by strong sales of Vascular Access and respiratory products, both of which saw coronavirus-led elevated demand.
Zacks Rank and Stocks to Consider
Teleflex currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are West Pharmaceutical Services, (WST - Free Report) , Thermo Fisher Scientific (TMO - Free Report) and Align Technology (ALGN - Free Report) .
West Pharmaceutical reported third-quarter 2020 adjusted EPS of $1.15, beating the Zacks Consensus Estimate by 13.9%. Net revenues of $548 million outpaced the consensus estimate by 7.2%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Thermo Fisher, a Zacks Rank #2 company, reported third-quarter 2020 adjusted EPS of $5.63, beating the Zacks Consensus Estimate by 28.8%. Revenues of $8.52 billion outpaced the consensus mark by 10%.
Align Technology reported third-quarter 2020 adjusted EPS of $2.25, surpassing the Zacks Consensus Estimate by a stupendous 281.4%. Net revenues of $734.1 million exceeded the Zacks Consensus Estimate by 38%. It currently carries a Zacks Rank #2.
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Teleflex (TFX) Q3 Earnings & Revenues Beat, Decline Y/Y
Teleflex Incorporated’s (TFX - Free Report) adjusted earnings per share (EPS) from continuing operations of $2.77 for the third quarter of 2020 were down 6.7% year over year. However, the bottom line surpassed the Zacks Consensus Estimate by 22%.
GAAP EPS for the third quarter was $2.46, reflecting a 49.3% massive plunge from the year-ago $4.85.
Revenues in Detail
Net revenues in the third quarter dropped 3.1% year over year to $628.3 million and declined 4.1% on a constant exchange rate or CER. The top line surpassed the Zacks Consensus Estimate by 1.3%. Per the company’s estimates, COVID-19 had a net negative impact on revenues of approximately $78 million or 12%.
Segmental Revenues
In the third quarter, the Vascular Access segment reported net revenues of $160 million, up 6.8% year over year at CER. The company registered strong growth within both PICC and EZ-IO products. COVID-19 had a 1% positive impact on this segment’s sales in the third quarter.
The Interventional business registered net revenues of $93.2 million, down 13.5% on a year-over-year basis at CER. Revenues were largely dented by delay in the recovery of certain non-emerging procedures along with the negative impact stemming from a catheter recall that occurred during the quarter.
Teleflex Incorporated Price, Consensus and EPS Surprise
Teleflex Incorporated price-consensus-eps-surprise-chart | Teleflex Incorporated Quote
Within the Anesthesia segment, net revenues dropped 14.4% to $75.7 million, primarily owing to lower sales of laryngeal masks, regional anesthesia and airway management products.COVID-19 had an approximately 10% negative impact on this business in the quarter.
The Surgical segment recorded net revenues of $82.2 million, reflecting 12.3% fall at CER due to lower sales of ligation portfolio and instruments. The company witnessed a significant 13% headwind from COVID-19 on this business.
Revenues of $81.8 million in the Interventional Urology segment improved 11% on a year-over-year basis at CER. The recovery of elective procedures contributed to this business in the third quarter. Teleflex estimated an approximate 29% COVID-19-related headwind in the third quarter on this business.
Meanwhile, OEM recorded revenue growth of $49.4 million, down 11.8%. This business saw delayed impact of COVID-19 relative to other businesses.
The Other product segment (consisting of the company’s respiratory and urology care products) registered net revenues of $86 million, highlighting growth of 0.5% at CER. The growth was primarily supported by increased demand for certain humidification and respiratory products resulting from COVID-19.
Margins
In the reported quarter, gross profit totaled $329.3 million, down 7.3% year over year. Gross margin contracted 235 basis points (bps) to 52.4%.
Overall adjusted operating loss was $171.6 million compared with adjusted operating loss of $209.3 million in the year-ago period.
Liquidity Position
Teleflex exited the third quarter with cash and cash equivalents of $347.5 million, down from $553.5 million at the end of the second quarter.
Cumulative cash flow used in operating activities from continuing operations at the end of the third quarter was $241.5 million against net cash provided by operating activities of $289.2 million in the year-ago period.
2020 Outlook
Teleflex is currently unable to ascertain the scope and duration of the pandemic as well as quantify the actual impact. The company also anticipates material disruption caused by the evolving COVID-19 pandemic and macroeconomic environment. It further expects significant adverse financial impact of the coronavirus pandemic. Accordingly, this time too the company has not provided its 2020 outlook.
However, it expected sequential improvement during the fourth quarter of 2020 compared with the third quarter.
Our Take
Teleflex reported better-than-expected third-quarter results. However, on a year-over-year basis, earnings and sales both declined significantly. Most of the segments registered revenue decline organically on a 12% aggregated negative impact from COVID-19. Margin debacle is another major concern.
On a positive note, there has been significant sequential improvement in the company’s segmental performance on gradual recovery of the economy.
Growth within the Americas was driven by strong sales of Vascular Access and respiratory products, both of which saw coronavirus-led elevated demand.
Zacks Rank and Stocks to Consider
Teleflex currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are West Pharmaceutical Services, (WST - Free Report) , Thermo Fisher Scientific (TMO - Free Report) and Align Technology (ALGN - Free Report) .
West Pharmaceutical reported third-quarter 2020 adjusted EPS of $1.15, beating the Zacks Consensus Estimate by 13.9%. Net revenues of $548 million outpaced the consensus estimate by 7.2%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Thermo Fisher, a Zacks Rank #2 company, reported third-quarter 2020 adjusted EPS of $5.63, beating the Zacks Consensus Estimate by 28.8%. Revenues of $8.52 billion outpaced the consensus mark by 10%.
Align Technology reported third-quarter 2020 adjusted EPS of $2.25, surpassing the Zacks Consensus Estimate by a stupendous 281.4%. Net revenues of $734.1 million exceeded the Zacks Consensus Estimate by 38%. It currently carries a Zacks Rank #2.
Legal Marijuana: An Investor’s Dream
Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.
Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.
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