Integra (IART) Up 1.8% Since Earnings Report: Can It Continue?

About a month has gone by since the last earnings report for Integra LifeSciences Holdings Corporation (NASDAQ:IART) . Shares have added about 1.8% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Recent Earnings

Integra LifeSciences reported adjusted earnings per share of 45 cents in the third quarter of 2017, which declined 2.2% from the year-ago figure.

Adjusted EPS also missed the Zacks Consensus Estimate of 47 cents. Including one-time items, the company reported earnings of 4 cents per share, down 54% from the year-ago quarter.

Revenue Discussion

Total revenue in the reported quarter increased 11.4% year over year to $278.8 million, which lagged the Zacks Consensus Estimate of $286 million. Excluding revenues from acquisitions, discontinued products and the effect of currency exchange rates, organic revenues rose 1.5% year over year.

The solid revenue growth in the third quarter was primarily driven by strong contribution from the Orthopedics and Tissue Technologies segments.
Coming to product categories, revenues from the company's Specialty Surgical Solutions segment increased 3.4% to $164.8 million.

Orthopedics and Tissue Technologies revenues came in at $114.1 million in the third quarter, up 25.5% year over year.

Margin Trend

Gross margin contracted 81 basis points (bps) to 63.5% in the reported quarter. Per the company, adjusted gross margin contracted 60 bps to 68.7%.

Selling, general and administrative expenses increased 29.9% to $145.9 million in the reported quarter, while research and development expenses contracted 0.6% to $15 million. Adjusted operating margin saw a 763-bps contraction to 5.8% in the third quarter.

Financial Position

Integra LifeSciences exited third-quarter 2017 with cash and cash equivalents of $481.9 million, up from $154.6 million recorded at the end of second-quarter 2017. As of Sep 30, 2017, net cash flow from operating activities was $102.9 million, down from $109.9 million in the year-ago quarter.

2017 Outlook Tweaked

Management has raised the full-year 2017 revenue guidance from $1.125-$1.140 billion to $1.165-$1.175 billion. Meanwhile, full-year 2017 organic revenue growth range was lowered to 4% from 6% to 7%. The Zacks Consensus Estimate for full-year 2017 revenues is $1.20 billion, below the guided range.

The company has revised its full-year 2017 adjusted EPS guidance to$1.83-$1.87 from the previous range of $1.88-$1.94. The Zacks Consensus Estimate for 2017 adjusted earnings is pegged at $1.91, above the company’s guided range.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimate flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.

VGM Scores

Currently, Integra's stock has a nice Growth Score of B, though it is lagging a lot on the momentum front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for growth investors than value investors.

Outlook

The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.