Needham Keeps a Hold Rating on Cantel Medical Corp

By Ryan Adsit

Needham analyst Michael Matson reiterated a Hold rating on Cantel Medical Corp (NYSE: CMD) today. The company’s shares opened today at $72.83.

Matson wrote:

“CMD’s F3Q17 revenue and EPS met consensus. Overall organic revenue growth slowed to 7.4% CC in F3Q17 from 12.1% CC in F2Q17 due mainly to a difficult comp. Endoscopy growth slowed from F2Q17 as expected; its 9% growth was just below our 10% estimate but we consider this to be a solid result considering that CMD was up against a 44% comp in F3Q16 (driven, in part, by the Custom Ultrasonics recall). Water Purification & Filtration and Healthcare Disposables growth also slowed from F2Q17. Adjusted gross margin was up 130 bps Y/Y due to product mix and cost improvements and this marked the 14th consecutive quarter of Y/ Y gross margin improvement. We maintain our Hold given CMD’s slower organic growth and valuation (CY17E P/E of 35.7x vs. small/mid-cap GARP peers at 27.9x).”

According to TipRanks.com, Matson is a top 100 analyst with an average return of 14.0% and a 69.5% success rate. Matson covers the Healthcare sector, focusing on stocks such as Boston Scientific Corp, Cardiovascular Systems, and Zimmer Biomet Holdings.

Cantel Medical Corp has an analyst consensus of Hold.

Based on Cantel Medical Corp’s latest earnings report for the quarter ending January 31, the company posted quarterly revenue of $185 million and quarterly net profit of $17.97 million. In comparison, last year the company earned revenue of $174 million and had a net profit of $13.9 million.

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Cantel Medical Corp. engages in the provision, development, and manufacture of infection prevention products and services in the healthcare market. It operates through the following segments: Endoscopy; Water Purification and Filtration; Healthcare Disposables; and Dialysis. The Endoscopy segment produces medical device reprocessing systems, disinfectants, and detergents to disinfect endoscopes and reusable components. The Water Purification and Filtration segment provides purification equipment, separation, sterilization, and decontamination products. The Healthcare Disposables segment manufactures face masks, sterilization pouches, towels, bibs, tray covers, saliva ejectors, germicidal wipes, and filter system for dental unit waterlines. The Dialysis segment develops and markets medical device reprocessing systems, sterilants, disinfectants, dialysate concentrates, and supplies. The company was founded on August 16, 1963 and is headquartered in Little Falls, NJ.