Stephens analyst George Sellers reiterated an Overweight rating on Teleflex Incorporated (NYSE: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.

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. 

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