UFP Technologies: Medical Device Contract Manufacturing is a $518 Billion Market - Lake Street Expects Significant Earnings Surprise!
As a leading contract manufacturer in the healthcare sector, UFP Technologies (UFPT) already serves 25 of the 30 largest manufacturers of medical technology devices. It supports design processes through to series production, including in the aerospace, industrial, automotive and consumer goods sectors. However, 87% of its revenue comes from the medtech segment, which serves a $518 billion market that is expected to grow by 6.3% p.a. until 2032, according to Fortune Business Insights. AI is now likely to provide the breakthrough in surgical robotics,...
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'post_content' => 'As a leading contract manufacturer in the healthcare sector, UFP Technologies (UFPT) already serves 25 of the 30 largest manufacturers of medical technology devices. It supports design processes through to series production, including in the aerospace, industrial, automotive and consumer goods sectors. However, 87% of its revenue comes from the medtech segment, which serves a $518 billion market that is expected to grow by 6.3% p.a. until 2032, according to Fortune Business Insights. AI is now likely to provide the breakthrough in surgical robotics, which already accounts for 35% of MedTech revenues. First, a strategic supply agreement with Intuitive Surgical was renewed in March, which offers sales potential of $500 million over a four-year term. UFP Technologies could benefit from higher capacity utilization of the da Vinci Surgical System with medical components and packaging.
On June 28, Lake Street analysts raised the price target from $270 to $300 (Buy) following a meeting with management, as the momentum of recent quarters is likely to continue. The continued success of Intuitive Surgical and the reduction of excess inventory at certain customers are catalysts. Acquisitions in particular should also drive growth and exceed the conservative forecasts. Lake Street expects net profit of $9 per share for 2026 and over $10 per share by 2027. The analyst consensus so far is $7.79 and $8.44 per share respectively.
On July 1, the purchase of AJR Enterprises was announced for $110 million in order to better address the growing market for safe patient handling. The product range will be expanded to include patient documentation and transfer devices for safe transportation. In the long term, sales are expected to grow by 12-18% over the next three to five years. The company is also targeting a gross margin of 28% to 31% and an operating margin of 15% to 18%. The growth check scores 14 out of 15 possible points, but the valuation is not favorable with a P/S ratio of 5 and a P/E ratio of over 43. However, the share is providing buy signals for traders with a new all-time high.
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