Teleflex Stock To $104?

Teleflex (TFX) stock has jumped 9.5% during the past day, and is currently trading at $131.25. Our multi-factor assessment suggests that it may be time to sell TFX stock. We have, overall, a pessimistic view of the stock, and a price of $104 may not be out of reach. We believe there are a few things to fear in TFX stock given its overall Weak operating performance and financial condition. Hence, despite its Moderate valuation, this makes the stock look Risky.

Below is our assessment:

Ask yourself – Is holding TFX stock risky? Of course it is. High Quality Portfolio mitigates that risk.

Let’s get into details of each of the assessed factors but before that, for quick background: With $5.8 Bil in market cap, Teleflex provides single-use medical devices for critical care and surgical procedures, including vascular access, catheter systems, and interventional products for coronary, structural heart, and peripheral therapies.

[1] Valuation Looks Moderate

This table highlights how TFX is valued vs broader market. For more details see: TFX Valuation Ratios

[2] Growth Is Moderate

• Teleflex has seen its top line grow at an average rate of 4.5% over the last 3 years
• Its revenues have grown 5.4% from $3.0 Bil to $3.2 Bil in the last 12 months
• Also, its quarterly revenues grew 19.4% to $913 Mil in the most recent quarter from $764 Mil a year ago.

This table highlights how TFX is growing vs broader market. For more details see: TFX Revenue Comparison

[3] Profitability Appears Weak

• TFX last 12 month operating income was $561 Mil representing operating margin of 17.6%
• With cash flow margin of 12.3%, it generated nearly $391 Mil in operating cash flow over this period
• For the same period, TFX generated nearly $-328 Mil in net income, suggesting net margin of about -10.3%

This table highlights how TFX profitability vs broader market. For more details see: TFX Operating Income Comparison

[4] Financial Stability Looks Weak

• TFX Debt was $2.8 Bil at the end of the most recent quarter, while its current Market Cap is $5.8 Bil. This implies Debt-to-Equity Ratio of 51.2%
• TFX Cash (including cash equivalents) makes up $354 Mil of $7.9 Bil in total Assets. This yields a Cash-to-Assets Ratio of 4.5%

[5] Downturn Resilience Is Weak

TFX has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• TFX stock fell 59.6% from a high of $443.85 on 28 April 2021 to $179.39 on 27 October 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is $256.21 on 14 December 2023 , and currently trades at $131.25

 
2020 Covid Pandemic

• TFX stock fell 43.0% from a high of $395.14 on 19 February 2020 to $225.31 on 23 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 29 July 2020

 
2008 Global Financial Crisis

• TFX stock fell 55.7% from a high of $86.19 on 18 July 2007 to $38.15 on 7 April 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 9 April 2013

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read TFX Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.