Monday, April 11, 2016

Seeking Alpha: Conmed's Renewed Quest For Growth

Turnaround stories can pay handsomely in the med-tech space, and CONMED (NASDAQ:CNMD) has certainly been doing a lot of the right things since activist investors catalyzed a major shake-up in 2014. Not only has the board of directors changed, but the company brought on former Stryker (NYSE:SYK) executive, Curt Hartman as CEO and has named several new executive vice presidents.

More importantly to me, the company has not tried to take any shortcuts or resort to flashy serial M&A to mask the turnaround process. Hartman has instead focused on establishing a better sales and commercialization infrastructure and driving better execution there, as well as longer-term improvements in product development. That's not to say there hasn't been M&A - the SurgiQuest deal was the first notable transaction in a long time and it seems like a very interesting business to own.

The problem I have is which valuation metrics to follow and just how much credit to give for these self-improvement efforts. Like many smaller med-techs, CONMED doesn't look appealing on FCF unless the company can drive GAAP operating margins into the high teens - something that is not impossible, but not easy either. The value proposition is better in EV/revenue terms, but it's going to be hard for CONMED to make real progress unless it can establish itself as more than a peripheral player in its core markets.

Continue here:
Conmed's Renewed Quest For Growth

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