Enovis Drifting In A Med-Tech No Man's Land

There’s no definitive rule about what works in med-tech, but companies that combine good-but-not-great revenue growth (below the double-digits) and good-but-not-great EBITDA margins (below the mid-20%’s) can often drift in a sort of valuation no man’s land where the shares can struggle to rerate meaningfully higher. That may be at least part of what’s hurting the share price performance of Enovis (NYSE:ENOV), as the company is an odd mix of business segments with varying growth prospects.

I wasn’t overly fond of Enovis at the time of the Enovis-ESAB (ESAB) separation, and the 20% or so drop in the share price since then hasn’t made me regret that position. I have been impressed with the performance of the Reconstructive business, but I continue to believe that management’s expectations and targets for the Prevention & Recovery business, and the business as a whole, could still be too high. What’s more, I think the lack of “pure-play” leverage to more attractive growth markets could make the stock a harder sell with institutional investors.

 

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Enovis Drifting In A Med-Tech No Man's Land