LivaNova PLC (LIVN, Financial), a prominent player in the medical devices and instruments industry, has recently witnessed a notable uptick in its stock performance. With a market capitalization of $3.05 billion, the company's stock price stands at $56.44, reflecting a 5.61% gain over the past week and a 10.87% gain over the past three months. This positive trajectory is underscored by the GF Value of $65.69, suggesting that the stock is currently modestly undervalued compared to its past GF Value of $67. Previously, the stock was considered a possible value trap, prompting investors to think twice. However, the current valuation indicates a more favorable outlook for potential investors.
Introduction to LivaNova PLC
LivaNova PLC, headquartered in the U.K., emerged from the merger of Cyberonics in the U.S. and Sorin in Italy. The company specializes in cardiovascular and cardiopulmonary solutions, including surgical heart valves, heart-lung machines, and oxygenation equipment. Additionally, LivaNova is a leader in neuromodulation devices for the treatment of epilepsy and depression. Post-merger, the company strategically divested its cardiac rhythm management and heart valve businesses. With approximately half of its revenue generated from the U.S. market, 21% from Europe, and the rest from other global regions, LivaNova holds a significant market presence.
Evaluating LivaNova's Profitability
When it comes to profitability, LivaNova PLC has a Profitability Rank of 4 out of 10. The company's operating margin stands at 1.86%, which is better than 51.88% of its industry peers. In terms of return on equity (ROE), LivaNova has a rate of 1.42%, surpassing 53.43% of competitors. The return on assets (ROA) is at 0.75%, outperforming 56.24% of industry counterparts. However, the return on invested capital (ROIC) is at -0.24%, which, while not ideal, is still better than 51.38% of the industry. Over the past decade, LivaNova has maintained profitability for three years, ranking higher than 24.78% of its peers.
Assessing Growth Prospects
LivaNova's Growth Rank is 5 out of 10. The company has experienced a 3.40% 3-year revenue growth rate per share, which is better than 36.79% of industry peers. However, the 5-year revenue growth rate per share shows a decline of -2.20%, still outperforming 21.08% of competitors. Looking ahead, the estimated total revenue growth rate for the next 3 to 5 years is 3.10%, which is more favorable than 14.88% of industry peers. The EPS without NRI growth rate for the same future period is projected at 0.87%, surpassing 4.88% of competitors.
Major Shareholders in LivaNova
Among the major shareholders of LivaNova PLC, PRIMECAP Management (Trades, Portfolio) holds a significant stake with 5,791,280 shares, accounting for 10.75% of the company's shares. Barrow, Hanley, Mewhinney & Strauss owns 2,372,027 shares, representing 4.4% of the share percentage. Notably, renowned investor David Einhorn (Trades, Portfolio) holds 1,229,316 shares, which equates to a 2.28% share percentage in LivaNova.
Competitive Landscape
In comparison to its competitors, LivaNova PLC stands among similar market capitalization entities within the medical devices industry. QuidelOrtho Corp (QDEL, Financial) has a market cap of $3.21 billion, iRhythm Technologies Inc (IRTC, Financial) is valued at $3.23 billion, and Inari Medical Inc (NARI, Financial) holds a market cap of $2.67 billion. These companies represent the competitive landscape that LivaNova operates within, each vying for market share in the medical devices sector.
Conclusion
In conclusion, LivaNova PLC's recent stock performance and modest undervaluation present an intriguing opportunity for value investors. The company's strategic focus on cardiovascular and neuromodulation devices, coupled with its significant market presence, underpins its potential for sustained growth. While profitability metrics indicate room for improvement, the company's growth prospects and the confidence shown by major shareholders suggest a positive outlook. As LivaNova continues to navigate the competitive landscape of the medical devices industry, its stock performance will be a key indicator of its ability to capitalize on market opportunities and deliver value to its investors.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
