Wright Medical (WMGI) Rides On Strong Portfolio & Innovation

On Nov 17, we issued an updated research report on Wright Medical Group N.V. (NASDAQ:WMGI) . The company recently reported third-quarter results, wherein adjusted earnings were in line with the Zacks Consensus Estimate. Exclusive platforms and technologies like PERFORM Reversed glenoid, ORTHOLOC 3Di and the SIMPLICITI shoulder system were key catalysts in the third quarter.

Wright Medical is focusing on product innovation through research and development. The company recently launched INVISION Total Ankle Revision System — the first system developed for total ankle revision arthroplasty. Of the other major platforms, the launch of PERFORM Reversed is expected to boost revenues.

Wright Medical’s solid guidance boosts investor’s confidence. The company expects net sales for 2017 in the band of $740-$745 million. This includes negative impact from foreign currency exchange of approximately 1%. The company forecasts 2017 adjusted EBITDA from continuing operations of $84-$88 million.

However, lackluster international performance of the lower extremities segment is a matter of concern. Sales at the segment declined 0.6% on a year-over-year basis to $65.4 million in the third quarter. The U.S. lower extremities business sales fell 0.3% in the third quarter. Internationally, lower extremities sales declined 1.7% year over year.

Among other concerns, pricing pressure continues to trouble Wright Medical. Increased costs related to product launch and re-building infrastructure are expected to exert pressure on margins. Problems associated with distributors are major headwinds.

In the past six months, Wright Medical has underperformed the industry with respect to price. The company’s shares have lost 10.4% as against the industry’s rally of almost 6.3%.

Zacks Rank & Key Picks

Wright Medical carries a Zacks Rank #3 (Hold). A few better-ranked medical stocks are PetMed Express, Inc. (NASDAQ:PETS) , Align Technology, Inc. (NASDAQ:ALGN) and Myriad Genetics, Inc. (NASDAQ:MYGN) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PetMed has a long-term expected earnings growth rate of 10%. The stock has rallied roughly 77.9% over a year.

Align Technology has a long-term expected earnings growth rate of 28.9%. The stock has skyrocketed 156.3% in a year’s time.

Myriad Genetics has a long-term expected earnings growth rate of 15%. The stock rallied 82.1% in a year.

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