Teleflex's Interventional Urology Portfolio Expansion Earns Overweight Rating From Bullish Analyst

Stephens analyst George Sellers reiterated an Overweight rating on Teleflex Incorporated TFX, raising the price target to $315 from $305.

Sellers applauds the company's strong market position in the interventional urology specialty, which comes with a differentiated offering (Barrigel's ability to be sculpted by physicians compared to SpaceOAR). 

The analyst expects the company to grab a share in the rectal spacer market successfully.

The company has recently agreed to acquire privately-held Palette Life Sciences AB for an upfront cash payment of $600 million at closing and up to an additional $50 million upon achieving certain commercial milestones. 

Palette Life Sciences is estimated to generate 2023 net sales of approximately $56 million.

Also Read: Teleflex Acquires Palette Life Sciences For $600M Upfront, Expands Interventional Urology Portfolio

With a growing market consisting of 288K prostate cancer patients in 2023, established reimbursement, and only one existing competitor, the analyst believes this is an attractive opportunity for TFX that builds on its existing interventional urology touch point. 

Sellers expects this acquisition to bolster TFX's growth profile, and with accretive gross margins, the analyst remains confident in TFX's ability to achieve its LRP. 

TFX expects the acquisition to be accretive to gross margins (vs. 59.4% in 1Q23) but ($0.15) dilutive to EPS in 2023, the analyst notes.

Considering the latest acquisition, the analyst raised the former 2023 revenue estimate from $2.96 billion to $2.97 billion and lowered the 2023 adjusted earnings estimate to $13.17 per share from $13.30 per share. 

For 2024, Sellers increased the former revenue estimate of $3.08 billion to $3.14 billion and lowered the adjusted earnings estimate to $14.17 per share from $14.53 per share. 

Price Action: TFX shares are trading lower by 2.25% to $250.27 on the last check Thursday. 

Now Read: Teleflex's Growth Drivers In Question: Analyst Predicts Potential Business Realignment