Raymond James cuts Teleflex stock rating to Market Perform

On Friday, Raymond (NSE:RYMD) James analyst Jayson Bedford revised the rating for Teleflex (NYSE:TFX), a global provider of medical technologies, shifting from Outperform to Market Perform. The change in stance was prompted by concerns over slowing fundamentals within the company’s operations. The downgrade comes as the stock has fallen over 20% in the past week, now trading near its 52-week low. Bedford acknowledged the company’s efforts in active portfolio management but indicated that the anticipated sales boost from Barrigel, used in conjunction with the Urolift system for treating enlarged prostates, did not materialize as expected.InvestingPro data shows the company maintains strong financial health with a current ratio of 2.27, indicating solid liquidity. Subscribers can access 12 additional key insights about Teleflex’s current position and future prospects.

Bedford noted that the stabilization of Urolift sales appears to be further out than previously thought, which may have influenced some of the recent portfolio activities observed. Despite acknowledging that much of the negative news may already be reflected in Teleflex’s current stock price, he expressed that valuation alone is not sufficient to maintain a more favorable rating. According to InvestingPro analysis, the stock appears undervalued at current levels, with an attractive free cash flow yield of 8%.

The analyst’s comments reflect a reevaluation of the initial expectations for Teleflex’s Urolift sales, particularly in light of the delayed stabilization. This reassessment has led to a more cautious view of the stock’s near-term prospects.

Bedford’s downgrade comes after a period of patience with Teleflex’s stock, during which there was an expectation for Barrigel to contribute positively to Urolift sales. The analyst admitted to overstaying this optimistic outlook, suggesting that the expected catalyst did not have the desired effect on the company’s performance.

In summary, Raymond James has adjusted its outlook on Teleflex shares, moving from a previously positive rating to a neutral Market Perform. This decision is based on the slower-than-expected progress in key product sales and the belief that the stock’s valuation cannot be the sole basis for an investment thesis.

In other recent news, Teleflex Incorporated reported its fourth-quarter earnings, revealing adjusted earnings per share of $3.89, which surpassed analyst expectations of $3.86. However, the company faced a revenue shortfall, reporting $795.4 million against a consensus forecast of $813.14 million. Teleflex provided guidance for 2025 with adjusted earnings per share projected between $13.95 and $14.35, which is below Wall Street’s expectations of $15.23. The company also announced a strategic plan to split into two publicly traded entities, "RemainCo" and "NewCo," to streamline operations and enhance management focus. In addition, Teleflex plans to acquire Biotronik’s Vascular Intervention business, though specific financial details were not disclosed. Piper Sandler downgraded Teleflex’s stock rating from Overweight to Neutral and reduced the price target from $255 to $140, citing concerns over the company’s future performance and challenges related to the spinoff process. The firm’s analysts highlighted uncertainties regarding the company’s capital structure and the management of the new spinoff entity. Teleflex’s CFO, Thomas Powell, will transition to a strategic advisor role, with James Winters set to assume the CFO position.

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