By Jonathan Weber
Exactech (NASDAQ:EXAC) declined 22% from its 52 week high in April over the last few days, this lead to substantial multiple contraction and provides a good buying opportunity for investors.
Exactech, a medtech company which develops, produces and sells implants for extremities, knees, hips and spines reported first quarter results last week: Revenues were down 3% yoy to $63 million, flat on a currency adjusted basis. Net income in the first quarter was $4.1 million ($0.29 per share), down from $4.2 million ($0.30 per share) in the prior year. Revenue growth was strong in the extremities segment, where Exactech realized revenue gains of 7% to $21 million (up 9% adjusting for currency). Since this is Exactech’s biggest division ongoing growth in this area bodes well for the future.
Strong growth in the extremities segment is likely, since this is the implant market with the highest overall growth rate. With an addressable market of $1 billion Exactech could easily gain market share here, allowing the company to grow revenues at an above market pace in the future.
Exactech’s other segments showed weaker results, its hip segment grew revenues by 1% (7% in constant currencies) to $11 million. With a market volume of more than $6 billion this is an area where Exactech can easily grow at an above market pace by capturing additional market share as well.
