Thursday, July 12, 2018

High Expectations Could Be Teleflex's Most Serious Challenge

Ever since deciding to focus exclusively on medical devices, Teleflex (TFX) has done quite well for itself and for its shareholders, with the stock price making a hockey stick formation since 2011. Gross margins have improved more than six points, operating margins have improved similarly (on an adjusted basis), and the company generates attractive recurring free cash flows. What’s more, management has shown on multiple occasions that it can identify, close, and integrate value-creating acquisitions.

Teleflex has a lot going for it right now, including growth opportunities tied to the ramp-up of existing products (particularly UroLift) and new pipeline opportunities. The issue is valuation; the market is valuing Teleflex as a company with double-digit revenue growth, which it will be in 2018, but as that growth rate decelerates, I am concerned about whether there will be enough drivers (or strong enough drivers) to maintain the valuation.

Read more here:
High Expectations Could Be Teleflex's Most Serious Challenge

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