BofA Securities upgraded Integer Holdings Corporation (NYSE:ITGR), citing the anticipated growth in pulsed field ablation (PFA) for treating atrial fibrillation.
Integer is one of the largest medical device outsourcing manufacturers, serving the cardiac rhythm management, neuromodulation, vascular, portable medical, and orthopedics markets.
The analyst expects the PFA sales to surge from $100 million-200 million in 2023 to over $2 billion in 2025.
Integer supplies key components for major PFA devices by Boston Scientific Corporation (NYSE:BSX), Medtronic Plc (NYSE:MDT), and Johnson & Johnson (NYSE:JNJ).
Integer has not quantified potential PFA contributions other than calling it a "tailwind." BofA analysts expect some benefit to show up in 2H24 as more PFA devices are rolled out in the U.S., but will accelerate in 2025.
BofA foresees upcoming PFA device launches, potentially adding up to $90 million in extra revenue by 2025 and boosting Integer's performance by 200-300 basis points. The analyst upgrades Integer from Neutral to Buy with a price target of $135, up from $105.
BofA models ~8% revenue growth for Integer in 2025 (vs. Street's 7%) and says that PFA growth opportunity suggests potential for upside.
In 2024, management's outlook on its PFA opportunity appears more optimistic than in the previous year.
They emphasize their exposure to various players in the PFA market and anticipate benefiting from its uptake regardless of which company dominates the market.
Integer maintains customer confidentiality, yet it likely serves key industry players, the analyst writes.
The company produces various components for each customer, from individual parts to finished devices. Recent acquisitions like Oscor and Pulse have bolstered its product offering. Integer stands to gain from wider adoption of its products, particularly depending on the popularity of specific devices.
Price Action: ITGR shares are up 3.45% at $119.76 on the last check Monday.
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