On Thursday, Needham, a financial services firm, adjusted the price target for CONMED Corporation (NYSE:CNMD) shares to $106 from the previous $107 while retaining a Buy rating on the stock.
The revision follows the second-quarter 2024 results from Intuitive Surgical (NASDAQ:ISRG), which included higher-than-expected placements of its latest da Vinci 5 surgical systems. This development is anticipated to create a modest near-term challenge to CONMED's revenue and earnings per share (EPS).
Intuitive Surgical's report on July 18, 2024, disclosed the placement of 341 da Vinci systems, out of which 70 were the new da Vinci 5 systems. The number exceeded Needham's prior estimates.
In response to these results, Needham has increased its forecast for the da Vinci 5 systems, which, according to their scenario analysis, slightly raises the pressure on CONMED's financial performance in the near term.
Despite the adjustment, Needham's stance on CONMED's valuation remains unchanged, considering the shares to be significantly undervalued. The firm's updated Base Case now projects an EPS of $5.31 for CONMED in 2025. Applying a peer forward multiple of approximately 20 times to the estimated 2024 earnings suggests a 12-month share price target of $106.
The revised price target of $106 reflects a slight decrease from the previous estimate due to a marginally lower EPS forecast for 2025. Needham's analysis indicates that while the new da Vinci 5 systems may affect CONMED's short-term financial outlook, the overall valuation of the company's shares continues to be attractive.
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