Medtech Supplier IntriCon Rallies After Bullish Stifel Initiation

IntriCon Corporation IIN, a medical technology company and major supplier to  Medtronic PLC MDT's diabetes division, is "one of the more interesting and undiscovered small-cap names" in its sector, according to Stifel. 

The Analyst

Analyst Jonathan Block initiated coverage of IntriCon shares with a Buy rating and 12-24-month price target of $35, suggesting 79-percent upside. The stock was added to Stifel's Select List.

The Thesis

IntriCon is a key beneficiary of Medtronic's current and future product cycles, Block said in a Monday note.

The medical division's prospects alone justify 50-percent stock appreciation, the analyst said.

"We see ongoing tailwinds to IntriCon's relationship with Medtronic (81 percent of segment sales) and our 2017-2020 revenue CAGR specific to the Medtronic agreement is 20-percent-plus." 

IntriCon is at the forefront of democratizing the $17-billion worldwide hearing market, Block said. The market could be radically changed by favorable legislation that would do away audiologists for recommending hearing aids in the mild-to-moderate segment and possibly allow users to control OTC hearing aids, Block said.

This could occur over the next 12-24 months, the analyst said. 

"With IntriCon being the only non-Big 6 manufacturer with an FDA-approved hearing aid coupled with the company's recent investments, IntriCon appears uniquely positioned to capitalize on this very large market opportunity," Block said. 

The Price Action

IntriCon shares lost about 1 percent year-to-date through Monday.

The stock was rallying after the upgrade and was up 20.66 percent at the time of publication Tuesday.

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