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Here's Why You Should Hold on to Wright Medical (WMGI) Stock

Zacks Equity Research

Wright Medical Group N.V. WMGI continues to benefit from strong international presence, solid prospects in the global orthopedic space and improved product launches. However, adverse forex is a persistent concern.

The stock currently carries a Zacks Rank #3 (Hold).

Price Performance

Shares of Wright Medical have lost 25.60%, wider than the industry’s decline of 7.7% in a year’s time. Meanwhile, the S&P 500 Index has risen 1.4%.



What’s Deterring the Stock?

Forex continues to remain a concern as the company generates a substantial portion of its total revenues from international operations. This, in turn, can be adversely affected by fluctuations in foreign currency exchange rates.

In fact, for 2019, Wright Medical anticipates a 1% headwind related to foreign currency.

What’s Favoring the Stock?

Wright Medical has been gaining from international expansion for quite some time now. In fact, the company’s international net sales are anticipated to improve significantly on the back of a steady performance in Biologics.

Further, the company has been reaping benefits from improving trends in the global orthopedic space.

Moreover, the company has a significant presence in the key emerging markets like Asia, which further boosts prospects.

Additionally, the company’s diversified product portfolio has been bolstering its overall performance over a considerable period of time. Notably, the company is likely to gain from the upcoming launch of REVIVE revision shoulder system.

Product launches, which include internally developed products and those from acquisitions, have been driving the company’s top line and we expect this trend to continue in the future.

Interestingly, the Cartiva buyout is expected to open up market opportunities worth $400 million for Wright Medical. For the remainder of 2019, Cartiva sales are projected at $13 million. The same for the third and fourth quarters of 2019 is estimated at $5.5 million and $7.5 million, respectively.

Which Way Are Estimates Trending?

For 2019, the Zacks Consensus Estimate for revenues is pegged at $927.5 million, indicating an improvement of 10.9% from the year-ago reported figure. The same for earnings stands at 16 cents per share.

Key Picks

Some better-ranked stocks from the broader medical space are Baxter International Inc. BAX, Amedisys, Inc. AMED and CONMED Corporation CNMD, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Baxter has a long-term earnings growth rate of 12.8%.

Amedisys has a long-term earnings growth rate of 16.3%.

CONMED has a long-term earnings growth rate 14.9%.

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