A CEO has deeper insight into their own company’s operations than any outside analyst could ever hope to obtain. If a CEO is buying company stock, it can be a sign that business performance is set to improve.
In this report, we are going to highlight a large CEO purchase at Integer Holdings Corp (ITGR:US). Integer Holdings is a US medical device manufacturing company that serves the cardiac, neuromodulation, vascular, and portable medical markets. It is listed on the New York Stock Exchange and currently has a market capitalization of $2.3 billion.
Integer Holdings: insider buying
Form 4 filings show that on 5 November, Integer’s CEO Joseph Dziedzic purchased 5,000 shares at a price of $58.12 per share. This purchase, which increased his holding from 74,793 shares to 79,793 shares, cost the insider a total of $290,610.
Source: 2iQ Research
High insider IQ
This insider purchase is significant for several reasons. Firstly, it’s Dziedzic’s largest purchase for several years. It is over six times the size of his last purchase, which was in August. This suggests that the insider strongly believes the stock is undervalued right now.
Secondly, Dziedzic has an above-average trading IQ of 112. This means that in the past, his trades have been timed well. Our Insider Model sees his recent buying activity as bullish.
Integer Holdings posted a disappointing set of Q3 results in late October. As a result of Covid-19, sales for the quarter were down 22% on the same period last year to $236 million, while adjusted EBITDA was down 47%.
Looking ahead, however, performance is expected to pick up in the fourth quarter. For Q4, sales are projected to be $20 million to $35 million higher than in the third quarter while adjusted operating income margin is projected to be 200 to 300 basis points higher.
“Our third-quarter results demonstrate improved profitability versus the second quarter, and we expect the fourth quarter to be even stronger, as sales begin to recover from the pandemic and the profit margin rate recovery accelerates,” said Dziedzic.
In light of the expected improvement in performance, we see the insider buying from Dziedzic as a bullish signal. It indicates that the insider is genuinely confident about the future and that he expects the stock to rise.