Teleflex Buys Z-Medica For $500M In Cash; Street Sticks To Buy

Teleflex on Dec. 28 announced the completion of the acquisition of hemostatic product manufacturer, Z-Medica, for $500 million in cash, and an earnout payment of up to $25 million upon the accomplishment of certain milestones. Hemostasis refers to the process that helps to prevent and stop bleeding.

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Teleflex (TFX) also acquired certain tax attributes worth $40 million towards future tax benefits. The global provider of medical technologies intends to fund the acquisition through borrowings under its revolving credit facility.

The acquisition has an estimated revenue and adjusted EPS generation potential of $60-$70 million and $0.07-$0.15, respectively for FY21. The company expects a high-single digit revenue growth and further accretion to adjusted EPS beyond FY21.

Earlier this month, SVB Leerink analyst Richard Newitter raised the price target on TFX stock from $415 to $450 and reiterated a Buy rating. The new price target implies upside potential of close to 11%.

Recent meetings with the company’s management reinforced Newitter’s bullish view that Teleflex remained one of the more attractive revenue growth and margin expansion stories in mid/large-cap MedTech, with highly visibility to improving top/bottom line growth momentum through 2022-plus. (See TFX stock analysis on TipRanks)

From the rest of the Street, the stock scores an analyst consensus of a Strong Buy based on 8 unanimous Buys. The average analyst price target of $420.38 implies upside potential of 3.4% to current levels. Shares have gained 8% on a year-to-date basis.