Teleflex, the Healthcare sector company, was revisited by a Wall Street analyst today. Analyst Travis Steed from Bank of America Securities maintained a Sell rating on the stock and has a $122.00 price target.
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Travis Steed has given his Sell rating due to a combination of factors related to Teleflex’s strategic business decisions and financial outlook. The company is in the late stages of due diligence to sell its NewCo division, which includes a significant OEM business. While the sale could potentially enhance Teleflex’s financial position, the valuation of NewCo is uncertain, with expected EBITDA multiples ranging from 5-7x. This uncertainty in valuation, combined with the preference for a straightforward sale without complex components, contributes to the cautious outlook.
Furthermore, the remaining part of Teleflex, referred to as RemainCo, is projected to have an EPS of $10.00 to $11.34 by 2026, depending on the deployment of sale proceeds. Despite these projections, the current trading multiples suggest limited upside potential. Post-sale, Teleflex’s leverage is expected to be 2.5x, with a focus on share buybacks over mergers and acquisitions. The company’s ability to sustain mid-single-digit growth for RemainCo remains a concern, prompting the underperform rating.