CONMED Corporation (CNMD) PT Increased to $49 - Needham & Company

Needham & Company analyst, Mike Matson, noted that CONMED's (NASDAQ: CNMD) 1Q16 revenue and EPS beat consensus and management raised guidance to reflect more favorable exchange rates. The good news was that SurgiQuest sales exceeded our estimate and the integration seems to be going well. The bad news was that organic growth worsened in 1Q16 vs. 4Q15. No change to Buy rating but the PT increases to $49.

Revenue was $181.2M (down 2.2% constant currency [CC]) vs. consensus of $179.9M and EPS was $0.42 vs. consensus of $0.40. For 2016, management raised its revenue guidance to $768-778M from $760-770M vs. consensus of $765M and raised its adjusted EPS guidance to $1.95-2.05 from $1.85-1.95 vs. consensus of $1.91.

CNMD's organic revenue growth slowed to 2.2% CC in 1Q16 from 0.5% CC in 4Q15. The slower growth was due to weaker sales in Japan as CNMD renegotiated agreements with its distributors there, the time reps spent in AirSeal training, and the reps' subsequent focus on AirSeal at the expense of older products.

Orthopedic Surgery sales declined 1.2% CC to $93.4M. General Surgery sales grew by 16.7% CC (or declined by 2.6% CC organic) to $75.9. Visualization sales declined 7.7% CC to $11.9M.

CNMD's gross margin of 54.4% was up 120 bps Y/Y. Favorable production variances of 300 bps were partially offset by an unfavorable currency impact of 140 bps and unfavorable mix/price of 40 bps. SG&A was lower than expected and R&D was higher than expected. This resulted in an operating margin of 9.0% that was down 190 bps Y/Y.

For an analyst ratings summary and ratings history on CONMED click here. For more ratings news on CONMED click here.

Shares of CONMED closed at $44.40 yesterday.

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