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ICU Medical ICUI

December 30, 2008 – Comments (0) | RELATED TICKERS: ICUI

ICU Medical's intravenous systems, safe needles, catheters, pressure monitoring and blood sampling devices are essential. Regardless of the state of the economy, In a good economy or a bad one, doctors use these products on patients. This makes the company less affected by consumer consumption trends and more recession proof.
The company avoids enteringgoing into saturated markets. Instead, ICU Medical searches for empty markets, or markets with very little competition. This approach allows for stability in sales and margins.
Earnings have been positive, but choppy for the past three years. Most of that volatility can be attributed to an acquisition of a plant from Hospira in 2005. In order to fix this problem, management refocused their sales force., which they believe to be working.
Starting in 2009, Premier (an operator of health care purchasing networks) will market products from ICU Medical. This deal will allow the firm access to 2,000 hospitals and 50,000 other sites it could not previously reach.
The company will be building a plant in Slovakia. This plant, along with the plant in Italy, allows ICU Medical a shorter supply line to assist expansion in Europe.

Valuation:

We expect to see smoother revenue and earnings streams in the coming quarters. Although our estimates are on the high end, we think ICU Medical will achieve our targets. The stock trades at 17 times our forward- year estimate of $1.90. Using our projections and a fair value multiple of 19.5 times our forward- year EPS estimate we calculate a target price of $37.

The stock has been relatively stable despite a few choppy weeks in October and November of 2008. More recently, the stock has been consolidating between $30 and -$33. Shares will hit strong resistance at $35. If ICU MedicalnI can break past $35, the stock will reach our target price of $37 very soon after.