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

Nov. 29, 2022 9:04 PM ETEnovis Corporation (ENOV)SNN, SYK
Stephen Simpson profile picture
Stephen Simpson
18.4K Followers

Summary

  • Enovis is posting impressive growth in its Reconstructive segment and good pricing in its Prevention & Recovery segment, but margins remain under some pressure.
  • Outcomes drive market share, and Enovis is leveraging some strong products in its major joint and extremities portfolio to gain share, including growth within the important ASC market.
  • The Arvis AR-based navigation system could provide a further boost to the major joint business, and I expect additional tech/innovation-driven tuck-in deals.
  • Enovis shares do look undervalued, but I have ongoing concerns that the company's good-but-not-great growth and margins will leave it in an investor "no man's land".
Injured Woman Talking To Nurse After CT Scan In Hospital

Tom Werner/DigitalVision via Getty Images

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

This article was written by

Stephen Simpson profile picture
18.4K Followers
Stephen Simpson is a freelance financial writer and investor. Spent close to 15 years on the Street (sell-side, buy-side, equities, bonds); now a semi-retired raccoon rancher. That last part isn't entirely true. Probably.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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