RTI Surgical Inc. RTIX is set to beat the Zacks Consensus Estimate on the top-line front, going by the company’s recently announced preliminary fourth-quarter 2015 results. The company is scheduled to report fourth-quarter results on Feb 16, 2016.
RTI Surgical’s fourth-quarter revenue is roughly $76.1 million, way ahead of the Zacks Consensus Estimate of $68 million. The top line reflects growth of 7.2% on a year-over-year basis and is also higher than management’s guided range of $68–$69 million.
The fourth-quarter performance will be largely influenced by increased orders from commercial distributors. Meanwhile, the commercial business, per management, continues to be unpredictable owing to unfavorable timing of distributor orders.
Revenues generated from the domestic market amounted to $70.6 million, which reflects year-over-year growth of almost 8%. International revenues, on the other hand, stands unchanged at $5.5 million. On a constant currency basis, international revenues increased 11% from the year-ago quarter.
For full-year 2015, revenues amounted to $282.3 million and improved 7.4% on a year-over-year basis. Domestic revenues increased nearly 9% to $260.4 million, while international revenues fell 8.4% (up 4% at constant currency) to $21.9 million.
The stock has seen a 13.7% fall in its price since Dec 24, 2015. The impressive top-line performance is expected to boost investor confidence on the stock. We are impressed with RTI Surgical’s business in the domestic market, which is a key growth catalyst. However, the volatility in the commercial business raises concern. An unfavorable foreign exchange rate is also expected to hinder growth in the near term.
Zacks Rank and Key Picks
Currently, RTI Surgical has a Zacks Rank #4 (Sell). Better-ranked stocks in the medical instruments industry are Exactech EXAC, DexCom DXCM and Fresenius Medical Care FMS. While Exactech sports a Zacks Rank #1 (Strong Buy), both DexCom and Fresenius Medical Care have a Zacks Rank #2 (Buy).
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