Teleflex Incorporated (TFX) recently finished a transition from its industrial roots to a focused global medical products company, emphasizing in single-use, disposable medical products to improve safety, efficiency and patient outcomes, says Steven Howard, Managing Director at Global Investment Solutions.
“We find their product suite to be particularly attractive, given hospitals’ increased focus on preventing hospital-borne infections. Further, these are not capital-intensive and expensive products, so orders are less apt to be impacted when administrators are slashing budgets,” Howard said.
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Howard says the new medical structure at TFX allows for better pricing, margin opportunities and new avenues for growth than its previous conglomerate structure. He adds that the company has an innovative pipeline and is on its way to synergize acquired businesses uch as LMA’s laryngeal masks.
“This type of dynamic can have a very positive impact on margins. Near term, investors have been concerned about the slowdown in European sales, which has crimped full-year pricing goals, somewhat. Still, we think there is significant ability to raise operating margins toward 20% over time, from the current 16% level, and believe this is a good entry point for investors,” Howard said.
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