What Happened?
Shares of medical tech company CONMED (NYSE: CNMD) fell 6.2% in the morning session after the company announced its plan to exit its gastroenterology product lines as part of a broader portfolio adjustment.
These product lines were expected to generate between $90 million and $95 million in revenue in 2025, with gross margins of approximately 45%. CONMED projected that exiting this business would improve its overall gross margin profile. The company also reaffirmed its previous financial guidance for 2025, stating it did not expect a material impact on its results. However, the stock's decline suggested investors were more focused on the loss of a significant revenue stream than the potential for improved long-term profitability from the strategic shift.
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What Is The Market Telling Us
CONMED’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 14 days ago when the stock gained 5.7% on the news that comments from a key Federal Reserve official bolstered hopes for an interest rate cut. New York Federal Reserve President John Williams stated he sees “room for a further adjustment” in the near term, sparking a significant market rally. Following his remarks, the probability of the central bank cutting rates at its December meeting jumped from 39% to over 73%, according to the CME FedWatch tool. This positive sentiment provided relief to markets amid concerns over high valuations, particularly in AI-related stocks.
CONMED is down 38.3% since the beginning of the year, and at $41.54 per share, it is trading 44.4% below its 52-week high of $74.74 from December 2024. Investors who bought $1,000 worth of CONMED’s shares 5 years ago would now be looking at an investment worth $416.81.
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