ICU Medical: There Is Still Upside Here As Management Goes Big To Drive Value

Operating in a sub-sector of med-tech that has long rewarded scale, ICU Medical (NASDAQ:ICUI) has gone for scale in a big way. The acquisition of Smiths Medical from Smiths Group (OTCPK:SMGZY) was very nearly a “merger of equals”, at least in terms of revenue and so forth, and while the logic of the deal is sound, management is taking on some meaningful integration challenges and risks, including leveraging up the company.

There are a lot of things I like about this deal. Not only does Smiths Medical give ICU Medical more scale in its core infusion business, it adds complementary assets elsewhere in the business. Smiths will increase ICU’s international presence, and I see a lot of “blocking and tackling” opportunities to improve operational metrics.

Although these shares aren’t as cheap as I might like on cash flow, that’s not uncommon in med-tech, and I see fair value above $265 today.

 

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ICU Medical: There Is Still Upside Here As Management Goes Big To Drive Value