Morgan Keegan Has $63 Target On Teleflex After Meeting With Management (TFX)

Morgan Keegan is keeping its $63 price target on shares of Teleflex Incorporated TFX but is lowering its earning estimates after meeting with company management to discuss growth initiatives by the company. It rates shares at Market Perform. In a note to clients Morgan Keegan writes, "We recently met with senior leaders of Teleflex. Management continues to focus on accelerating top-line growth to 5% from 1% (1H 2010), and driving gross and operating margins towards 55% and 25%, respectively. Implicit in the company's objectives are the sale of non-strategic assets and acquisitions. With the issuance of the convertible debt last week, we believe some pressure on the shares could be alleviated, especially with an estimated 9% FCF yield on the base medical business. That said, the shares could become range-bound until earnings are re-based to reflect dilution from upcoming divestitures and acquisitions. There is no change to our Market Perform rating, and $63 price target. We are lowering our 2010 EPS estimate by $0.05 to $3.99 to reflect the the issuance of $350 mn in convertible debt, but note that our revised forecast is still within management's guidance of $3.95-$4.10. Our 2011 EPS estimate is reduced by $0.10 to $4.40 to reflect the convert." Shares of Teleflex Incorporated closed at $53.46 on Friday.