This Analyst Sees Durable Share Gains, Margin Expansion For Orthopedics-Focused Enovis

William Bliar has initiated coverage on Enovis Corp ENOV, a medical technology company focusing on the orthopedics market valued at approximately $25 billion, experiencing steady growth, especially in sub-categories such as extremities, which are growing rapidly due to the adoption of new technologies that are expanding patient reach. 

In 2024, the analyst anticipates its sales figures will reflect about an 8% market penetration, indicating substantial potential for expansion over the next five years and beyond.

With an Outperform rating, ENOV shares are trading at 11.7 times William Blair's pro forma 2024 EBITDA estimate, the average of the orthopedic and broad medtech growth groups trading at 13.7/20.5 times 2024 EBITDA. 

The analyst notes the valuation factors in integration risks with the Lima acquisition and represents an attractive entry point for upside in shares as management executes in the coming quarters.

In the foreseeable future, Enovis aims to use its international presence in the commercial sector to diversify its offerings into areas such as spine, sports medicine, and trauma. 

This strategic move is projected to tap into the untapped $28 billion orthopedic market segment. Although this expansion will be gradual and demand proficient management integration, Enovis's successful execution in recent years supports the possibility of achieving this long-term goal.

Price Action: ENOV shares are trading lower by 0.09% at $55.39 on the last check Wednesday.