RBC Capital Sees Meaningful M&A Execution For This Critical Care-Focused Stock

Teleflex Inc TFX hosted its Investor Day and issued plans for 2023-2025. RBC Capital Markets believe TFX is a stronger company delivering stable revenue growth in the M-HSDs, margin expansion, double-digit EPS growth, and strong FCF.
It positions Teleflex to execute its capital allocation strategy more meaningfully in the future.
TFX has low leverage and enough firepower to execute on ~$2 billion in M&A. The analysts expect a disciplined approach to accretive M&A that will accrue to the benefit of shareholders.
Related: Why These Analysts Cut Price Target On Teleflex.
RBC maintains the Outperform rating, with a price target of $380 (prior $390) reflecting current market multiples.
"TFX is also entering its LRP period with 'eyes wide open' on inflation, which appears prudent to us and is delivering margin expansion during its LRP period despite the headwind," the analysts added.
Overall, RBC believes the company's focus on high-growth products within its portfolio is key to it delivering at or above its LRP objectives.
TFX's high-growth products (Urolift, MANTA, hemostats, EZ-IO, OnControl, and PICCs) represent ~25% of total revenues.
Assuming 14-15% growth during the LRP, high-growth products would comprise ~33% of total TFX sales by FY25.
For total Teleflex, the analysts are modeling ex-fx growth of 6.4% or 6.9% underlying ex-divestiture and 10.9% adjusted EPS growth during 2023-25E.
Price Action: TFX shares are up 0.76% at $289.47 during the market session on the last check Monday.

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