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Wright Medical (WMGI) Portfolio Solid, Lower Extremities Dull


On Nov 6, we issued an updated research report on Wright Medical Group N.V. WMGI. The company recently reported third-quarter results, wherein adjusted earnings were in line with the Zacks Consensus Estimate. Exclusive platforms and technologies like PERFORM Reversed glenoid, ORTHOLOC 3Di and the SIMPLICITI shoulder system acted as key catalysts in the third quarter. Wright Medical currently carries a Zacks Rank #3 (Hold).

Wright Medical is focusing on product innovation through research and development. The company recently launched INVISION Total Ankle Revision System — the first system developed for total ankle revision arthroplasty. Of the other major platforms, the launch of PERFORM Reversed is expected to boost revenues.

Wright Medical’s solid guidance boosts investor confidence. The company expects net sales for 2017 in the band of $740 million to $745 million. This includes negative impact from foreign currency exchange of approximately 1%. The company forecasts full-year 2017 adjusted EBITDA from continuing operations of $84 million to $88 million.

However, lackluster international performance of the Lower extremities segment is a matter of concern. Sales at the segment declined 0.6% on a year-over-year basis to $65.4 million in the third quarter. The U.S. lower extremities business sales fell 0.3% in the third quarter. Internationally, lower extremities sales declined 1.7% on a year-over-year basis.

Wright Medical Group N.V. Price

Of the other concerns, pricing pressure continues to trouble Wright Medical. Increased costs related to product launch and re-building infrastructure are expected to exert pressure on margins. Problems associated with distributors are major headwinds.

In the past six months, Wright Medical has underperformed the broader industry with respect to price. The company has lost 11.8%, comparing unfavorably with the broader industry’s gain of almost 6.5%.

Q3 Earnings of MedTech Majors at a Glance

Meanwhile, Q3 earnings season has taken center stage, with most of the S&P members having reported their numbers. Medical, one of the broader sectors among the 16 Zacks sectors, is expected to put up an impressive show this quarter.

PetMed Express PETS reported earnings per share of 43 cents in the second quarter of fiscal 2018, up 79.2% on a year-over-year basis. Also, gross margin expanded 548 bps year over year to 35.2% in the reported quarter. The stock sports a Zacks Rank #1 (Strong Buy). ). You can see the complete list of today’s Zacks #1 Rank stocks here.

Luminex LMNX reported adjusted earnings per share of 19 cents in the third quarter of 2017, up 216.7% year over year. Revenues in the quarter increased almost 4.1% year over year to $74.1 million. The stock flaunts a Zacks Rank #1.

Intuitive Surgical ISRG posted adjusted earnings of $2.77 per share in the third quarter of 2017, up 34.5% year over year. Also, revenues increased 18% year over year to $806.1 million. The stock carries a Zacks Rank 2 (Buy).

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