CFX

Colfax Corp

Healthcare, Industrial/Transportation, Event Driven/Special Sit


Presented:07/01/2021
Price:$46.65
Cap:$6.33B
Current Price:$39.83
Cap:$2.22B

Presented

Date07/01/2021
Price$46.65
Market Cap$6.33B
Ent Value$7.95B
P/E Ratio97.19x
Book Value$31.32
Div Yield0%
Shares O/S135.60M
Ave Daily Vol1,314,068
Short Int13.84%

Current

Price$39.83
Market Cap$2.22B
Colfax Corp. operates as a diversified technology company. The firm provides orthopedic care and fabrication technology products and services to customers. It operates through the following segments: Medical Technology and Fabrication Technology. The Medical Technology segment develops, manufactures and distributes medical devices used for rehabilitation, pain management and physical therapy. The Fabrication Technology develops, manufactures and supplies consumable products and equipment. The company was founded by Mitchell P. Rales and Steven M. Rales in 1995 and is headquartered in Annapolis Junction, MD.

Publicly traded companies mentioned herein: Colfax Corp (CFX), Danaher Corp (DHR), Fortive Corp (FTV), Illinois Tool Works Inc (ITW), Lincoln Electric Holdings Inc (LECO), Stryker Corp (SYK)

Highlights

The presenter is long shares of Colfax Corp (CFX), which was founded in 1995 by Steven and Mitchell Rales, the brothers who had previously founded Danaher Corp (DHR). CFX started as an industrial manufacturing business but has been slowly transitioning its portfolio into less cyclical, more recurring revenue use cases and end markets. Today, 62% of revenues are generated by its fabrication technology business (ESAB) and the remaining 38% can be attributed to its medical technology business (DJO). The portfolio transition is expected to be completed in Q1’22 when CFX splits ESAB and DJO into two publicly traded companies via a tax-free separation (related presentation). Following the separation, he believes investors will own two high-quality businesses with impressive management teams, strong recent track records of execution, growing market shares, and opportunities to accelerate growth, expand margins, and consolidate fragmented industries. He sees CFX’s current $46 share price as an attractive entry point and uses a $73 per share SOTP valuation by year-end 2022. 

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