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On Monday, Stifel analysts adjusted their stance on CONMED Corporation (NYSE:CNMD), downgrading the stock from Buy to Hold and reducing the price target from $75.00 to $55.00. The decision comes as a reaction to several key factors that are affecting the company’s outlook and performance. The company, currently valued at $1.57 billion, has seen its stock decline 25.65% year-to-date, though InvestingPro analysis suggests the stock may be undervalued at its current price of $50.71.
The downgrade is primarily attributed to three main concerns. Firstly, the ongoing macroeconomic challenges, including tariffs and economic uncertainty, are weighing on the company’s prospects. Secondly, the company’s guidance for 2025 is heavily back-end weighted, raising questions about its near-term performance. Lastly, recent data on hospital purchasing indicates a year-over-year decline in Airseal disposables for the first time since the COVID-impacted year of 2020. Despite these challenges, CONMED maintains a perfect Piotroski Score of 9, according to InvestingPro data, indicating strong financial health.
Airseal products, which are estimated to make up about 18% of CONMED’s total sales, have been a focal point of investor anxiety regarding the company’s growth trajectory. This concern is exacerbated by the upcoming launch of Intuitive Surgical (NASDAQ:ISRG)’s DV5 system in mid-2025, which incorporates insufflation capabilities and eliminates the need for Airseal.
Adding to the concerns, the first quarter of 2025 showed a 2.7% decline in Airseal robotic utilization compared to the previous year, ending a five-year trend of driving above-market utilization growth. This decline is seen as a significant shift, given that Airseal has been a key driver of growth for CONMED in the past.
The downgrade and price target adjustment by Stifel reflect a recalibration of expectations for CONMED’s stock amidst a challenging economic environment and evolving market dynamics within the medical technology sector. Investors should note that CONMED’s next earnings report is scheduled for April 30, 2025, which could provide crucial insights into these concerns. For deeper analysis and additional insights, including 7 more exclusive ProTips, consider accessing the comprehensive research available on InvestingPro.
In other recent news, CONMED Corporation reported fourth-quarter 2024 earnings that exceeded consensus estimates, with organic revenue growth reaching 6.0%. The company’s sales for the quarter were $346 million, surpassing expectations by $5 million, and earnings per share came in at $1.34, significantly higher than the anticipated $1.20. Despite these positive results, CONMED’s revenue and earnings guidance for 2025 fell short of expectations, prompting analyst actions. Needham maintained a Buy rating on CONMED but lowered its price target from $97 to $91, citing ongoing supply chain challenges. JPMorgan downgraded the stock from Overweight to Neutral and reduced the price target to $70, expressing concerns about the company’s execution issues and lower earnings guidance for 2025. Meanwhile, Stifel maintained a Buy rating and a $72 price target, noting the positive performance of CONMED’s Airseal system, which saw an 11.0% sales increase in 2024. The Airseal system, a significant contributor to CONMED’s revenue, continued to perform well despite the launch of competing technologies. Additionally, CONMED appointed Mark Kaye to its Board of Directors, effective February 2025, bringing his extensive financial and healthcare expertise to the company.
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