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Needham downgraded Conmed (NYSE:CNMD) from Buy to Hold on Thursday, citing concerns about the medical device maker’s slowing growth trajectory. According to InvestingPro data, the company’s shares appear undervalued despite maintaining a perfect Piotroski Score of 9, indicating strong financial health.
The research firm pointed to decreased long-term growth rates, particularly in Conmed’s AirSeal and Buffalo Filter product lines, as key factors behind the rating change. This slower revenue growth, currently at 4.32% for the last twelve months with a gross margin of 56.28%, is expected to result in more gradual margin improvement and reduced earnings per share growth.
Needham now projects Conmed’s long-term growth profile at 4-6% organic revenue growth with 10-12% EPS growth, a more modest outlook than previous estimates. While the firm highlighted concerns about Conmed’s debt level, InvestingPro analysis shows the company maintains a healthy current ratio of 2.26, with liquid assets exceeding short-term obligations. The debt-to-equity ratio stands at 0.91, and notably, the company has maintained dividend payments for 14 consecutive years.
The downgrade comes as Conmed’s valuation relative to peers has shifted. Needham indicated it had previously defended Conmed when the stock traded at a substantial discount to peers, but noted that small and mid-cap growth at reasonable price (GARP) peers have seen their price-to-earnings multiples contract.
Conmed’s 2026 estimated P/E multiple is now near these peers, according to Needham, removing what had been a key factor in the firm’s previous Buy rating on the medical device manufacturer’s shares.
In other recent news, ConMed Corporation announced its first-quarter 2025 earnings, reporting an adjusted earnings per share (EPS) of $0.79, which did not meet the analysts’ forecast of $1. The company’s revenue for the quarter was $321.3 million, also falling short of the expected $332.91 million. Despite these misses, ConMed highlighted strong product innovation, particularly in its BioBrace and AirSeal platforms, and provided optimistic guidance for future quarters. The company projects full-year revenue to be between $1.350 billion and $1.378 billion, with an expected adjusted EPS ranging from $4.45 to $4.60. In another development, ConMed has appointed LaVerne Council as the new Independent (LON:IOG) Chair of its Board of Directors, succeeding Martha Goldberg Aronson. This leadership change is part of the company’s ongoing board refreshment process. Lastly, ConMed is actively working on improving its supply chain stability and has made progress in reducing backorders, which should enhance its operational efficiency.
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