- ICU Medical Inc ICUI reported Q1 sales of $543.1 million vs. Raymond James' estimate of $530 million.
- Core ICU beat by $7 million, while newly acquired Smiths Medical missed by $5 million.
- With an Outperform rating, the analysts lowered the price target from $265 to $235.
- Adjusted EPS was $1.82, down from Raymond James' estimate of $1.73, on a lower tax rate.
- The analysts say that Q1 was always going to be a tricky quarter given the deal's complexity and the fact that ICU does not guide quarterly, but they hoped for a bit more momentum.
- Related: Smiths Group Divests Its Medical Division To ICU Medical In $2.4B Deal.
- Various supply chain challenges (some voluntary) made the quarter even messier.
- Underlying demand seems strong for both ICU and Smiths. Still, the supply chain dynamics have resulted in a much larger backlog, and when exactly the backlog will be fulfilled is challenging, the analysts wrote.
- These are near-term issues that should be fixed over time, and the merits of the deal still stand.
- ICU did not change its guidance, but Raymond James trimmed its estimates to reflect a slower Smiths ramp in the near term.
- "We believe much of this uncertainty is increasingly baked into sentiment, and we continue to see value in a self-help margin improvement story, which underpins our Outperform rating," the analysts added.
- Price Action: ICUI shares closed lower by 6.07% at $173.49 on Wednesday.
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