Healthcare
CNMD is an undersized, competitively disadvantaged seller of commodity general surgery and orthopaedic capital equipment and consumables. OWS previously recommended shorting the stock when it was trading at $135 (Jan 22). They subsequently closed their position (Sep 22) locking in a 30%+ gain. However, the stock has since rallied to over $120 with no clear fundamental driver. CNMD has tried to acquire higher-growth, higher-margin products to transform its business, but this strategy has yet to demonstrate any success. Capacity for further M&A is limited with leverage at ~5.3x. TP of $80, represents ~2.8x their 2024 sales forecast and ~23x their 2024 EPS estimate.
Edition: 161
- 26 May, 2023