J.P. Morgan MedTech: What to Expect in the Week Ahead & Latest Sector Thoughts: Who Will Beat, Who Will Miss?

Research evidence excerpt

J.P. Morgan MedTech: What to Expect in the Week Ahead & Latest Sector Thoughts: Who Will Beat, Who Will Miss?

rather than fundamentals, in our view.The company’s end-

markets in orthopedics and general surgery don’t make it the most attractive asset

for strategic acquirers in MedTech (i.e., only 3-5% growth), especially with

lingering concerns about the fate of the AirSeal insufflator now that Intuitive

Surgical has an integrated option in the newer daVinci 5 (daVinci attachments were

the key growth driver), but it could make sense as part of a broader portfolio of other

ortho assets. We believe a financial buyer makes more sense than a strategic one due

to this profile balancing attractive free cash flow generation (~100% conversion)

and a workable 2-3x net leverage ratio with lower organic growth, and can envision

a potential takeout that could look similar to recent private takeouts of other

businesses like Hologic, Stryker Spine, and Vantive (Baxter Kidney Care).

Something like ~9-10x EV/EBITDA NTM wouldn’t likely appear unreasonable if

the acquirer could refinance the debt at lower rates and improve sales performance.

• For the quarter itself, we’re hopeful CONMED is on an upwards trajectory

following a better-than-expected 1Q26, though the 2H-weighted setup still

leaves more to prove. Following headwinds from OUS distributor revenue pull

forward from 1Q26 to 4Q25, revenue growth should naturally accelerate in 2Q from

the low- to mid-single digits. However, the ramp implied in guidance needs a lot to

go right, in our view, including an improvement in supply in the Ortho business and

an acceleration in Smoke Evacuation and AirSeal. We’ll be looking for at least a

modest top-line beat and raise, though execution and supply concerns leave us