LeMaitre Vascular: A Small Cap With Best-In-Industry Growth

seekingalpha07-23

I outline why LeMaitre Vascular is my top choice in the Health Care Equipment industry and one of the best small caps in the sector.LeMaitre has shown incredible revenue and EPS growth since its IPO ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2453852083?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/184333047/image_184333047.jpg","is_english":true,"pubTime":"2024-07-23 16:49","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2453852083","market":"us","top_or_hot":-1,"title":"LeMaitre Vascular: A Small Cap With Best-In-Industry Growth","media":"seekingalpha","content":"<div>\n<p>I outline why LeMaitre Vascular is my top choice in the Health Care Equipment industry and one of the best small caps in the sector.LeMaitre has shown incredible revenue and EPS growth since its IPO ...</p>\n\n<a href=\"https://seekingalpha.com/article/4705679-lemaitre-vascular-small-cap-with-best-in-industry-growth\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>LeMaitre Vascular: A Small Cap With Best-In-Industry Growth</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nLeMaitre Vascular: A Small Cap With Best-In-Industry Growth\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-07-23 16:49 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4705679-lemaitre-vascular-small-cap-with-best-in-industry-growth><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>I outline why LeMaitre Vascular is my top choice in the Health Care Equipment industry and one of the best small caps in the sector.LeMaitre has shown incredible revenue and EPS growth since its IPO ...</p>\n\n<a href=\"https://seekingalpha.com/article/4705679-lemaitre-vascular-small-cap-with-best-in-industry-growth\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"XLV","symbol_name":"健康照护类股ETF-SPDR","start_time":0,"source_url":"https://seekingalpha.com/article/4705679-lemaitre-vascular-small-cap-with-best-in-industry-growth","article_id":"2453852083","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/184333047/image_184333047.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2453852083","pubTimestamp":1721724584,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"I outline why LeMaitre Vascular is my top choice in the Health Care Equipment industry and one of the best small caps in the sector.LeMaitre has shown incredible revenue and EPS growth since its IPO a","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"XLV":"健康照护类股ETF-SPDR","LU0070302665.USD":"FRANKLIN MUTUAL U.S. VALUE \"A\" (USD) ACC","BK4082":"医疗保健设备","LU0689472784.USD":"安联收益及增长基金Cl AM AT Acc","SG9999014898.SGD":"United Global Quality Growth Fund Dis SGD","AMAT":"应用材料","LU0289960550.SGD":"AB FCP I - GLOBAL EQUITY BLEND PORTFOLIO 'A' (SGD) ACC","IE0003U64NQ7.SGD":"PIMCO BALANCED INCOME AND GROWTH \"M\" (SGDHDG) ACC","MSFT":"微软","LMAT":"勒梅特微管医疗","BK4518":"OLED概念","ABT":"雅培","IE00BFSS8Q28.SGD":"Janus Henderson Balanced A Inc SGD-H","IE000KEQY171.SGD":"PIMCO BALANCED INCOME AND GROWTH \"M\" (SGDHDG) INC","V":"Visa","IE0034235188.USD":"PINEBRIDGE GLOBAL FOCUS EQUITY \"A\" (USD) ACC","LU0211326839.USD":"TEMPLETON GLOBAL INCOME \"A\" (USD) INC","IE00B3SWFQ91.USD":"PIMCO BALANCED INCOME AND GROWTH \"E\" (USD) INC","LU0069063385.USD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"A\" (USD) ACC","LU1815333072.USD":"THREADNEEDLE (LUX) GLOBAL FOCUS \"AUP\" (USD) INC","BK4519":"光伏太阳能","LU0289941410.SGD":"AB FCP I Dynamic Diversified AX SGD","IHI":"iShares Dow Jones U.S. Medical D","SPGI":"标普全球","IE00BLSP4239.USD":"Legg Mason ClearBridge - Tactical Dividend Income A Mdis USD Plus","LU0943347566.SGD":"安联收益及增长平衡基金AM H2-SGD","SG9999018865.SGD":"United Global Quality Growth Fd Cl Dist SGD-H","BK4112":"金融交易所和数据","LU0342679015.USD":"ALLIANZ GLOBAL EQUITY UNCONSTRAINED \"AT\" (USD) ACC","RMD":"瑞思迈","IE00BDCRKT87.USD":"PINEBRIDGE GLOBAL DYNAMIC ASSET ALLOCATION \"ADC\" (USD) INC","LU0124676726.USD":"AB SICAV I - SUSTAINABLE US THEMATIC PORTFOLIO \"A\" (USD) ACC","BK4516":"特朗普概念","IE00B2B36J28.USD":"JANUS HENDERSON GLOBAL LIFE SCIENCES \"I1\" (USD) INC","BK4106":"数据处理与外包服务","IE00BJJMRY28.SGD":"Janus Henderson Balanced A Inc SGD","LU":"陆金所","LU0820561909.HKD":"ALLIANZ INCOME AND GROWTH \"AM\" (HKD) INC","IE00BSNM7G36.USD":"NEUBERGER BERMAN SYSTEMATIC GLOBAL SUSTAINABLE VALUE \"A\" (USD) ACC","MDT":"美敦力","COST":"好市多","STE":"思泰瑞医疗","LU0096362180.USD":"CT (LUX) I GLOBAL FOCUS \"DU\" (USD)","LU2237957902.USD":"NIKKO AM GLOBAL EQUITY \"F\" (USD) ACC","LU1267930813.SGD":"FRANKLIN TEMPLETON SHARIAH GLOBAL EQUITY \"AS\" (SGD) ACC","BK4227":"交易和支付处理服务","SYK":"史赛克","LU2237957811.SGD":"NIKKO AM GLOBAL EQUITY \"F\" (SGD) ACC","IE0004445015.USD":"JANUS HENDERSON BALANCED \"A2\" (USD) ACC","LU0175139822.USD":"AB FCP I Global Equity Blend A USD"},"translate_title":"LeMaitre Vascular：行业增长最佳的小盘股","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AMAT":1,"XLV":1,"V":1,"SYK":1,"STE":1,"SPGI":1,"RMD":1,"MSFT":1,"MDT":1,"LMAT":1,"IHI":1,"ABT":1,"COST":1,"LU":0.6},"content_text":"I outline why LeMaitre Vascular is my top choice in the Health Care Equipment industry and one of the best small caps in the sector.LeMaitre has shown incredible revenue and EPS growth since its IPO and also offers a well-supported, fast-growing dividend.Despite a seemingly high valuation, further growth is expected.   spanteldotru/iStock via Getty ImagesA Seeking Alpha member recently asked me to cover the medical equipment space, an eclectic corner of the Health Care sector that gets far less attention than the pharmaceuticals, biotech firms, and giant insurance and health services providers. As a long-term dividend growth investor, I’ll focus on six companies that have consistently increased their distributions over the past decade plus while also growing revenue and EPS. Perhaps the best opportunity is LeMaitre Vascular (NASDAQ:LMAT), a small- to mid-cap company that has shown incredible growth since its IPO in 2006. I will outline how and why LeMaitre became my top choice in this industry and one of my top picks in the Health Care sector as a whole. The Initial Screen To home in on high-quality dividend growers, I start with five filters in Seeking Alpha’s screener tool:  Years of increasing dividends – minimum five years of growth  Five-year dividend growth rate – minimum CAGR of 5%  Dividend yield – minimum 0.5%  Dividend payout ratio – maximum 70%  Quant rating – minimum 2.5 (Hold)   Applying these criteria swiftly reduces the potential pool in the Health Care Equipment industry from 138 to just six companies. Here they are from largest to smallest: Abbott Laboratories (ABT) – market cap 177.5B medical devices, diagnostics, nutritionals, and pharmaceuticals Stryker Corporation (SYK) – market cap 129.9B med-surg, implant, and endoscopic products; hospital equipment Medtronic (MDT) – market cap 101.9B cardiovascular, surgical, neuroscience products; diabetes devices/therapies ResMed (RMD) – market cap 29.8B sleep and respiratory care, medical equipment, dental devices, SaaS software STERIS (STE) – market cap 25.4B sterilization products and services, life sciences products, dental instruments LeMaitre Vascular – market cap 1.9B surgical devices and implants to treat peripheral vascular disease I have summarized their revenue segments to illustrate the diversity of the industry. While the large caps offer a wide range of products and services, LeMaitre’s business is quite specialized. The Dividends All six companies have increased their dividend annually for over a decade, with maintaining manageable payout ratios:     ABT  SYK MDT RMD STE LMAT   Years of Growth 52 15 47 11 18 12   Forward Yield 2.16% 0.94% 3.52% 0.95% 0.93% 0.74%   10Y CAGR 10.4% 10.3% 9.2% 6.4% 9.8% 16.5%   5Y CAGR 11.7% 9.2% 6.3% 5.3% 9.4% 14.1%   3Y CAGR 8.1% 8.5% 5.3% 7.2% 1.8% 13.5%   Payout Ratio 48.5% 28.3% 53.0% 25.9% 22.9% 38.2%   Click to enlarge Income-focused investors might gravitate toward Medtronic or Abbott, dividend aristocrats with some of the highest yields in the industry. But as the chart below illustrates, both have lagged the 235% total return of the S&P 500 over the past decade—Medtronic severely so. For that matter, neither have outperformed The Health Care Select Sector SPDR® Fund ETF (XLV) or iShares U.S. Medical Devices ETF (IHI), which are more appropriate benchmarks. 10-Year Total Return (Seeking Alpha) On the other hand, Stryker, ResMed, and STERIS have all beaten the broader market and their benchmarks, and LeMaitre has absolutely crushed them. But as these four companies have yields below 1%, many investors overlook or dismiss them for dividend-centered portfolios. This may be shortsighted, as the lower-yielding companies have obviously delivered drastically greater returns, at least from a backward-looking perspective. LeMaitre is the smallest by far, and while its 0.74% yield may seem trivial, the double-digit dividend growth CAGR is significant. LeMaitre’s dividend profile is, in fact, comparable to those of Visa (V), Microsoft (MSFT), Costco (COST), Applied Materials (AMAT), and S&P Global (SPGI), all of which are considered excellent low yield, high growth options. Takeaway: The Health Care Equipment industry may not have ideal choices for investors seeking income or for those near to/in retirement. For investors with a longer horizon, however, there is much to like here. LeMaitre’s appeal extends well beyond its diminutive yet growing dividend. A review of key fundamentals establishes it as the industry’s leader in several areas and a compelling growth opportunity despite its apparent high valuation. The Smaller, The Better Most growth metrics favor the three smaller companies. ResMed, STERIS, and LeMaitre have all posted double-digit gains in revenue, operating cash flow, and CAPEX spending over the past decade. ResMed and LeMaitre also stand out for consistent EPS growth.   Growth ABT SYK MDT RMD STE LMAT   Revenue 10Y 7.6% 8.7% 6.7% 11.4% 12.3% 11.8%   Revenue 5Y 5.7% 8.6% 1.2% 12.7% 13.1% 13.1%   Revenue 3Y 0.4% 12.5% 2.4% 14.0% 18.3% 14.1%   Operating Cash Flow 5Y 7.4% 9.7% 1.4% 31.6% 12.9% 24.1%   EPS 10Y 7.5% 15.8% -0.9% 11.1% 5.8% 26.9%   EPS 5Y 14.3% -1.1% -4.1% 16.0% 1.4% 6.4%   EPS 3Y -3.7% 33.4% 1.2% 27.6% -6.3% 9.2%   CAPEX 5Y 10.8% 2.6% 6.8% 15.7% 14.3% 25.4%   Quant Grade C- C+ D- B+ A A-   Click to enlarge Stryker’s metrics are less impressive, and I would not recommend Abbott or Medtronic without seeing considerable improvement. I will refer readers to Leo Nelissen (Abbott) and Gen Alpha (Medtronic) for more bullish perspectives on these two companies. Note that STERIS’s Quant factor rating for growth is inflated due to the company’s dramatic year-over-year EPS improvement. As this is a short-term turnaround, at least for now, I still give the edge to ResMed and LeMaitre despite their modestly lower Quant ratings. All six companies score highly in terms of profitability, but ResMed and LeMaitre again stand out. Both have consistently grown their net income margins and cash from operations over the past decade with ROE, ROA, ROCE, and ROIC ratios well above their industry average. Both are clearly firing on all cylinders, but LeMaitre outperforms its peers in terms of dividend growth and total return at nearly every interval since 2014. The question is, can the growth story continue? Investment Thesis The case for LeMaitre is centered around the alarming rise in peripheral vascular disease (PVD), which affects over 200 million people worldwide. This condition is closely linked to higher rates of obesity and diabetes and is associated with risk factors such as smoking, coronary artery disease, and a sedentary lifestyle. Aging demographics and longer life expectancy are also driving the increase, creating a significant and growing market need for effective treatments. LeMaitre stands out as a leading global innovator, manufacturer, and marketer of devices, implants, and services specifically designed to treat PVD. The company distributes to vascular surgeons in over ninety countries, giving it a strong international presence. At the core of LeMaitre’s product lineup is the valvulotome, their flagship device. It is complemented by an array of other interventional and surgical solutions including biologic grafts, synthetic grafts, and closure devices. Together, these products help treat a wide range of vascular conditions. LeMaitre’s substantial investment in research has been a key driver of innovation aimed at enhancing existing products and developing new solutions. The company has strategically expanded its product portfolio and market presence through several key acquisitions. These include Artegraft (2020; biological grafts), CardioMind (2018; microcatheters), Tepso (2017; vascular grafts), and Restore Flow (2016; cryopreserved human vein and artery allografts). Each has strengthened LeMaitre’s position in the vascular device market and broadened its offerings. The market dynamics (i.e., rising disease rates) outlined above suggest further growth opportunities for LeMaitre, and investors in the company can reasonably expect continued leadership in this market segment. Valuation and Price Target LeMaitre Vascular is currently trading at 46x the FY24 consensus EPS estimate of $1.77 and around 44x the FY25 estimate of $1.95. Both are above its five-year average forward P/E of 42x and significantly above the historical and forward averages of its peers. Based on the predicted EPS growth of 11.5% through 2026, Wall Street analysts have a current price target of $81.25, which also suggests modest overvaluation. I base my own near-term targets on reversion to the recent historical P/E multiple of 42x. For year-end 2025, this comes out to $92.40 and for year-end 2026, around $105. I will also refer readers to Zack Bristow of Bernard Holdings, who recently shared an in-depth analysis of LeMaitre’s valuation and sees similar upside to ca. $100–$107 based on expanding sales, increasing ROC, and an increasing sales force. These valuation targets assume a long-term investment horizon, so again, I would caution income investors or those closer to withdrawing capital to exercise caution. Investment Risks LeMaitre outlines a broad range of risks in their most recent 10-K dated February 29, 2024. In sum:  Competition – The medical device industry is highly competitive with well-established players and new entrants seeking to innovate. This includes larger companies with more resources, which could impact LeMaitre’s market share and pricing power. Technological obsolescence – Related, advancements in medical technology could render LeMaitre’s products obsolete should competitors develop more effective solutions. Regulation and compliance – LeMaitre’s products are subject to stringent regulatory requirements in various countries, and compliance (e.g., manufacturing practices, clinical trials, and post-market surveillance) can be costly. R&D expenses – Substantial investment is crucial for innovation, but investments may not lead to successful new products. This could negatively impact financial performance. Adoption rates – The success of products depends on adoption by providers. Resistance to new technologies or preference for competitors’ products can affect sales growth. Reimbursement – Healthcare reimbursement policies influence adoption and usage of LeMaitre’s products. Reduced rates or changes in coverage can impact revenue. Litigation – The medical device industry is prone to litigation, including patent disputes and product liability claims.  Investor Takeaway While the Health Care Equipment industry may not have ideal choices for income-seeking investors, for those with a longer horizon, LeMaitre Vascular is an excellent company to consider. In terms of fundamentals, it is the industry leader by numerous key metrics and has numerous factors in its favor for continued growth.  At its current valuation, I rate LeMaitre a Hold but would feel comfortable adding shares on a broader market dip.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.26.3","shortVersion":"4.26.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2453852083"}