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Integer Holdings Corporation ITGR has been gaining from its research and product development activities. The optimism led by a solid fourth-quarter 2023 performance and its solid foothold in the broader MedTech space are expected to contribute further. However, volatility in energy markets and dependence on third-party suppliers are a hurdle.

In the past year, this Zacks Rank #3 (Hold) stock has gained 49.9% compared with the 8.5% rise of the industry and the S&P 500’s 27.2% growth.

The renowned medical device outsource manufacturer has a market capitalization of $3.86 billion. The company projects 15% growth for the next five years and expects to maintain its strong performance. Integer Holdings surpassed the Zacks Consensus Estimate in all the trailing four quarters, delivering an earnings surprise of 11.5%, on average.

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Let’s delve deeper.

Research and Product Development: Investors are optimistic about Integer Holdings’ position as a developer and manufacturer of medical devices and components. The company is focused on developing new products, improving and enhancing existing products and expanding the use of its products in new or tangential applications.

In addition to ITGR’s internal technology and capability development efforts aimed at providing its customers with differentiated solutions, the company engages outside research institutions for unique technology projects.

Solid Foothold in the Broader MedTech Space: Investors are optimistic about Integer Holdings’ stable footing in the cardiac, neuromodulation, orthopedics, vascular and advanced surgical markets. Its primary customers include large, multi-national original equipment manufacturers and their affiliated subsidiaries.

ITGR is focused on sales efforts to increase its market penetration in the Cardio & Vascular, Neuromodulation and Non-Medical Electrochem markets. The company is undertaking strategic initiatives to maintain its leadership position in the cardiac rhythm management market.

Strong Q4 Results: Integer Holdings’ robust fourth-quarter 2023 results raise optimism. The company registered year-over-year top-line and bottom-line performances. The Medical segment recorded robust results owing to the strength of its product lines.

Downsides

Volatility in Energy Markets: Sales of Integer Holdings’ products into the energy market depends upon the condition of the oil and gas industry. Currently, oil and natural gas prices have been subject to significant fluctuation. As a result, the oil and gas exploration and production business are affected by a variety of political and economic factors, including worldwide demand for oil and natural gas and worldwide and domestic supplies of oil and natural gas. Per management, a change in the oil and gas exploration and production industry or a reduction in the exploration and production expenditures of oil and gas companies could cause the company’s energy market revenues to decline.

Dependence on Third-Party Suppliers: Integer Holdings’ business depends on a continuous supply of raw materials, which may be susceptible to fluctuations due to transportation issues, government regulations and price controls, among others. Significant increases in the cost of raw materials, which cannot be recovered through increases in the prices of the company’s products, could adversely affect its operating results.

Estimate Trend

Integer Holdings is witnessing a positive estimate revision trend for 2024. In the past 90 days, the Zacks Consensus Estimate for earnings has moved 1.7% north to $5.38 per share.

The Zacks Consensus Estimate for the company’s first-quarter 2024 revenues is pegged at $413.3 million, suggesting a 9.1% rise from the year-ago quarter’s reported number.

Key Picks

Some better-ranked stocks in the broader medical space are DaVita Inc. DVA, Cardinal Health, Inc. CAH and Ecolab Inc. ECL.

DaVita, flaunting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 12.1%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 35.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.

DaVita’s shares have gained 61.7% compared with the industry’s 16.9% rise in the past year.

Cardinal Health, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 14.2%. CAH’s earnings surpassed estimates in each of the trailing four quarters, with the average being 15.6%.

Cardinal Health has gained 37.5% compared with the industry’s 8.9% rise in the past year.

Ecolab, sporting a Zacks Rank of 1 at present, has an estimated long-term growth rate of 13.3%. ECL’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 1.7%.

Ecolab’s shares have rallied 36.7% against the industry’s 5.1% decline in the past year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.